Buying Ethereum: What Do Investors Say?

Ethereum is the most popular altcoin on the crypto market.

However, starting from July 2022, it has been on a constantly descending path, with values plummeting compared to values in the previous two years.

This has been attributed to shifts in markets and volatile geopolitical events worldwide. Some have posited the idea that because Ether is now more firmly established in the mainstream market, its increasing recognition has also come with an additional vulnerability.

Digital coins have a reputation for often extreme price fluctuations, with prices sometimes changing dramatically between days or even hours.

And while the best way to buy Ethereum depends on your particular goals and aims as an investor, it’s always important to remember that you should check the values regularly, but not so much that you’re driven to make rash decisions.

Seeing prices drop and, by extension, losing capital can cause you to make emotional decisions that can hurt your digital wallet in the long run.

As a general rule, crypto, in general, and Ethereum, in particular, are the best choices for long-term investments, not short-term trades, so you shouldn’t allow fluctuations to deter you from your ultimate goal.  

And while 2022 hasn’t been the best year in terms of ETH prices, investors have largely kept their hopes up, confident in the knowledge that the crypto is bound to climb to new heights sooner or later.

The beginning of 2023 has started on a disappointing note, however, as the coin failed to rise to its estimations, and the year began with Ethereum with a price in the lower $1,200 range.

So, what is the investment case for Ethereum going into 2023, and what are traders expecting to happen this year?

Bear VS Bull 

Over 2022, global markets have been marked by a bearish, receding tendency. This has been the trend in all trading markets over the last year, and crypto was no exception. And while the direction has remained fixated on bear characteristics, at least for the current time, the strategy of investors has shifted.

For the first days of 2023, investors seem to have followed an increasingly bullish strategy, as proven by the current put-call ratio. If there are more puts than calls, it signals a bearish market.

However, January has noted a different movement, with calls overwhelming puts, showing that traders have flipped towards the bull strategy. These ratios refer to the buying and selling of options which give their holders the right to buy or sell the underlying asset for a predetermined price in the future.

When the strike price is higher than the spot price, traders can sell the market above the current market price, while puts that have a strike price lower than the market are referred to as “out of the money”.

In the case of Ethereum, the dominance of calls on the market shows a distinctive preference for bullish trading. While it’s still too early to determine if this is set to be the trend for the rest of the year, especially in a market as changeable as one of the cryptocurrencies, so far, investors seem to have taken a bolder approach.

This is mainly due to the lowering prices encouraging Ethereum holders to want to buy more, convinced they’ll see substantial revenue when ETH returns to its previous values.

Estimations 

While researchers and analysts are still on the fence about how the crypto market could evolve over the upcoming months, most investors are sure the crypto is likely to outperform.

One of the most unmistakable signs in this direction is that whale transactions on the Ethereum blockchain have been gaining momentum, notably after prices surged a little over the course of the first week of the new year.

Whale transactions are buy orders that occur at prices far above the markets, setting up a buy wall in the process. These orders tend to elevate order execution prices, forcing other traders to increase their buying prices as well. Ethereum defines such a transaction as being anywhere between $100,000 and $1 million.

For some, this has come as a signal that Ethereum is likely to do much better in 2023 than it did the previous year. Some have even estimated that ETH might do better overall than BTC this year.

However, it’s challenging to make estimations based solely on the movements of large Ethereum holders.

Take these changes with a grain of salt since while it can be viewed as a sign of market confidence, it’s also probable that investors are simply looking to take advantage of short-term price changes, and there isn’t any significant change in sight.

A tech-yielding asset 

Ethereum is a digital asset that has a yield. While this isn’t a singular feat in the cyber asset market, what makes Ethereum distinctive among its peers is the fact that it is nearly unique in that it is funded through three sources:

• Inflation, programmatically determined based on the number of validators staking
• ME, the maximal extractable value, the profit earned from transaction reordering
• Priority fees, the extra tips users have to pay to have their transaction included rapidly

Given recent interest hikes, ETH is up against stronger competitors now. The significant risk associated with the coin due to its often volatile values is compensated for by its yield, which is more than twice the size of technology equities.

The bottom line 

The year has just begun, and there are still several predictions regarding the way in which things could go for Ethereum. Over 2022, investors have learned to practice caution and not throw themselves too far ahead, lest they endanger their wallets and capital.

There are some who expect the year to be a difficult one for Ethereum holders, with predictions estimating that ETH could reach levels down to $400.

As it’s still difficult to say with perfect accuracy where the trend will go, your best bet as an investor is to keep an eye out for price fluctuations. Make sure to check price charts regularly, and don’t fall for the hype.

Trusting your own instincts is the best bet during a largely uncertain situation.

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