Mistakes to Avoid when Buying Ethereum

In the last few years, Ethereum became the second leading digital currency, with a high market cap and a great value. Ethereum’s popularity has grown together with the number of investors looking to buy Bitcoin, its rival, especially because of the significant tech advancements it went through. However, Ethereum is a volatile asset, and its price depends on many factors, including the demand and market supply, the explosion of DeFi and Bitcoin’s dominance.

Investing in Ethereum can translate into profit opportunities if you choose to buy and sell this asset. However, you need to know a few things before investing in Ethereum, like the fact that it is a volatile asset, and you should invest only what you can afford to lose. Also, you need to know the most common mistakes when investing in Ethereum to avoid them. Here are a few of them.

Not using a reputable exchange

You can buy Ethereum in many ways, and exchanges are one of the most popular alternatives. You could also use online apps or stock brokers, but be cautious, as not all options are legitimate. So, it is very important to ensure you search for a reputable platform that will offer customers a great experience. Crypto exchanges are great because you can get whatever fraction you need from the asset.

With the help of exchanges, you can buy a small number of tokens and as little as 0,001 part of Ethereum. However, you need to keep in mind to search only for reputable exchanges and avoid the ones that don’t look legitimate.

If you are new to the crypto sector, you should stick with the most popular exchanges that have been in the crypto space for some time already, as this will ensure your coins will be safe. Also, you should only look for exchanges that provide insurance and have the possibility to store the cryptos in a cold wallet.

Not learning about Ethereum

You should never invest in something you don’t know enough details about, especially when we are talking about something as volatile as digital currencies. So, before you invest in Ethereum, it is essential to research it and learn more details. Your goal will not be to become an Ethereum expert but to know its main features and how this cryptocurrency works.

Ethereum, like any other cryptocurrency, has gone through many price fluctuations, and this characteristic is not likely to change, so you need to know important information before investing in it. If you truly understand the concept of Ethereum and the reason behind its value, you can make more informed decisions not based on price movements or trends.

Investing only in Ethereum

Cryptocurrencies are high-risk assets, and their prices can change quite rapidly, depending on many reasons. You could lose all your investments if you are not careful and don’t know enough details about digital tokens.

Volatility can affect your investments, especially if the price movements are unexpected and extreme. Therefore, you shouldn’t invest only in one cryptocurrency but diversify your portfolio with many digital currencies. This strategy is efficient, as it can reduce the risk exposure. It will be best to allocate between 5%-10% of your portfolio to virtual currencies and invest the rest in less volatile investments.

Storing ETH in a hot wallet

After you buy Ether, you will need a wallet to store your currencies safely. A crypto wallet differs from the normal type as it doesn’t hold coins but is accessed through a private key. Crypto wallets offer a wide variety, allowing you to choose between hot wallets vs cold wallets. The difference between the two is that hot wallets are connected to the Internet, and cold ones aren’t, making them a more secure alternative. Unfortunately, hot wallets can result in many security issues, as your account can be a target for malicious people who want to steal your tokens.

On the other hand, a cold wallet will offer improved protection, as your coins will not be compromised and will be stored offline in the form of a USB drive. Also, these wallets have greater security, and if someone tries to access them, the device will lock the wallet after three failed attempts.

Trying to time the market

Ethereum is always at an all-time high, so it might be tempting to wait for the time when the price will drop. You might want to wait until Ethereum is below a certain level and then make your investment, but this might not be such a great idea.

The problem with this mistake is that there is no accurate time to buy ETH, and no one can guarantee that ETH might drop to your target price. The price could also increase, and you might regret not buying it at a lower level. If you choose to buy Ethereum, you should do it because you see it as a long-term investment and think the price will rise in the next few years, not in the hopes that you will become a millionaire overnight.

Putting all your savings into it

All cryptocurrencies are volatile and higher-risk assets, including Ethereum. Yes, investors have had huge returns so far, but things can change quite quickly. Ethereum peaked at over $1,200 in 2018, but the price remained under $100 after. And more than three years passed after Ethereum reached the $1,200 mark again. Also, it is very important to invest only an amount you are comfortable losing, especially if you need the money in the near future.

Is Ethereum worth buying?

Ethereum is a well-established digital currency with incredible use cases and grand ambitions. Bitcoin might be seen as the king of crypto, but Ethereum gets the merit regarding its flexibility and superior technology. Ethereum is extremely versatile, and you can use it for decentralized finance, gaming, and even as a blockchain solution for your company.

However, buying Ethereum depends on your financial position and risk tolerance. This digital asset is promising, but you should always remember it is volatile. So, you need to research and not jump into the crypto world without considering some crucial aspects.