Cryptocurrency is a notoriously volatile industry, regardless of what coin you’re trading. During periods of extreme volatility, it’s easy to become disheartened when trades don’t go your way. It’s also easy to become overconfident when you get lucky, falsely attributing it to your trading strategy — when, in reality, the price often rose or fell for reasons other than you assumed.
Despite the uncertainty, there are sometimes still strategies you can use to trade certain tokens successfully. Ether (ETH) is arguably where you might be able to succeed this year. Here are three tips that might help.
Understand what actually affects ETH price movements
There are many ways to analyze the price of a given cryptocurrency, and different price valuations will be given depending on the model used and how much weight is given to a specific set of conditions.
But incorrect weighting can produce erroneous conclusions. For instance, a cryptocurrency can generate positive buy signals across the board, but other factors can send the entire market tanking.
This is precisely what happened with Ethereum’s Merge, where a successful transition to proof-of-stake that reduced consumption by 99.9% was not really reflected in the price. In fact, bearish traders ran the price into the ground.
Related: Bitcoin will surge in 2023 — But be careful what you wish for
The crypto market also tends to correlate heavily with Bitcoin (BTC), which is traded by a lot of institutional and hedge fund money that is tied to interest rates and traditional financial markets. ETH currently holds a 0.9 correlation with Bitcoin.
Leading up to May 2021 and November 2021, ETH experienced significant price increases. This was attributed to announcements from big firms, such as the decision of the European Investment Bank to offer a two-year bond on the Ethereum blockchain. Visa also announced plans to transact in USD Coin (USDC) over Ethereum.
A summary of the factors that affect the price of Ether is that it will be affected most heavily by Bitcoin’s price movement, interest rate decisions, institutional investment and macroeconomic conditions that discourage investment.
Fundamental blockchain indicators, however, can strongly point toward medium-term appreciation, perhaps over one to three years. Based on these indicators, Ethereum is a very powerful blockchain with a thriving ecosystem set for growth.
Anticipate the seasonality
Like other cryptocurrencies, ETH has specific months where it…
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