Ethereum has become the second leading crypto, with great value and a high market cap. Its popularity is mainly due to two significant tech advancements: NFTs and the Metaverse. While the Ethereum price depends on the market supply and demand, other factors influence it, such as Bitcoin’s domination and the explosion of DeFi.
While investing in Ethereum may not turn you into a millionaire, buying and selling this asset can translate into profit opportunities. However, if you’ve decided to buy ethereum, you should first learn about the mistakes that crypto newbies make to avoid them and thrive as an investor.
Mistake No 1: Not Using a Reputable Exchange
There are many ways to buy Ethereum, and exchanges are one of the most popular options available. But you can also use online stock brokers or apps. However, it’s vital to remember that not all options are legitimate, so practice caution and look for a reputable platform known for offering customers a great experience. A crypto exchange is ideal if you want to purchase a small number of tokens because you can get the fraction you need from the asset.
Suppose you don’t have enough cash in your account; you can buy 0,001 part of Ethereum, which only requires $10. If you aren’t sure whether the exchange is legitimate, it’s best to avoid using it because after buying the coins, it’s impossible to move them out. If you’re new to the crypto space, we recommend sticking to established exchanges that have been in business for several years, as this will ensure the safety of your coins. As a rule of thumb, you should look for an exchange that provides insurance and stores its crypto in cold storage.
Mistake No 2: Not Learning About Ethereum
You can’t invest in something you know nothing about, so before putting your money into Ethereum, make sure to research it first. This is something you should do regardless of the type of investment. The goal isn’t to become an expert in Ethereum, but you should at least understand how the cryptocurrency works and what features make it different from the other digital assets. Learning about Ethereum is especially important considering its volatile nature.
This asset (just like any other cryptocurrency) has always experienced price fluctuations, and this isn’t likely to change, so it’s worth looking into its history. Once you understand Ethereum and its value, you won’t let trends or price movements impact your decisions.
Mistake No 3: Trying to Time the Market
Timing the market is the opposite strategy of buying and holding crypto: it means switching funds between different assets. Crypto markets are always open, running 24 hours a day, during all the times of the year – including public holidays. As a result, you can buy Ethereum within a specific window to get the best price; however, there’s a problem, namely that it is pretty much impossible to time the market. No one can guarantee how Ethereum will perform – its price may increase, and you may regret not buying it right now.
Or, the opposite could happen, and the price may drop considerably, allowing you to buy low – but this isn’t necessarily a favorable scenario, as you may second guess your decision out of fear that the price will get even lower. If you want to invest in Ethereum, adopting a long-term mindset is best. This will take the pressure off, as you will buy the crypto because you expect the price to rise in the future instead of hoping to get rich in just a few weeks.
Mistake No 3: Investing only in Ethereum
The thing about cryptocurrencies is that they are higher-risk assets, meaning that they can quickly change directions. In other words, there is always the possibility of losing your money. Now, volatility doesn’t pose any risks as long as the increase and decrease in price are steady.
But if the price movements are extreme and unexpected, volatility can affect your investments. Therefore, you should avoid putting all your money in Ethereum. Instead, consider diversifying your crypto portfolio by including multiple assets. This strategy is efficient when it comes to reducing your risk exposure. A good recommendation is to allocate between 5%-10% of your portfolio for cryptocurrencies and reserve the rest for less volatile investments with longer track success records, like mutual funds.
Mistake No 4: Storing Your ETH in A Hot Wallet
Once you buy Ethereum, you’ll need a wallet to store your tokens safely. A crypto wallet is different from a normal one as it doesn’t hold coins; instead, it can be accessed through a private key. You can either use a hot or cold wallet; the main difference between them is that hot wallets are connected to the Internet, while cold wallets are not, making the latter more secure. Hot wallets can pose security issues, making your account a target for malicious actors who can steal your ETH.
On the contrary, a cold wallet isn’t compromised because it often takes the form of a USB drive, and the tokens are stored offline. Suppose someone tries to access your crypto wallet; your device’s security features would make it difficult for them to succeed, locking them out after three attempts.
Is it worth buying Ethereum in 2023?
Ethereum is a well-established cryptocurrency with grand ambitions and incredible use cases. Bitcoin may be considered the king, but Ethereum gets all the merit regarding its superior technology and flexibility. This cryptocurrency is incredibly versatile, meaning you can use it for gaming, decentralized finance, or even as a blockchain solution for your business.
Whether you should buy Ethereum in 2023 depends on your risk tolerance and financial position. While this digital asset is promising, it’s important to remember that it is a volatile investment. So, this decision requires thoughtful consideration: you don’t want to jump straight into the crypto space without first thinking about some essential aspects. Some experts are optimistic about the future of Ethereum, believing its price could rise considerably this year. However, there are no guarantees, only speculations in the crypto market, so if you want to buy in Ethereum, the best thing you can do is to stay level-headed and not invest more than what you can afford to lose.