In the past months and years, an imminent end has been prophesied several times for cryptocurrencies. But the swan song has always proven to be wrong. On the contrary: true to the motto “dead people live longer”, Bitcoin recently had a rapid rally, improved its record several times and gained more than 300 percent over the year. A growing number of institutional investors are building their first positions, as a look at the development of accounts with at least 1000 Bitcoins shows. In particular, the announcement by PayPal that it will also support crypto currencies in the future has recently provided fresh momentum.
Bitcoin course (Bitcoin / Dollar) cryptocurrency
Course provider: Bitstamp
So far, the party with digital coins has been limited to Bitcoin, whose market share of the entire crypto universe recently rose to 70 percent. Here parallels to the stock market can be seen: While the tech heavyweights in particular benefited on Wall Street last year, a lot of risk capital is currently flowing into by far the largest coin in crypto. But it is also true that the stocks from the second row usually offer a better return when the environment is right. The MDax has been developing better than the Dax for years, and the US second-tier stocks have also recently gained more strongly than the blue chips. So is it worth getting into altcoins?
The return prospects are of course tempting. But more performance also means more risk. Daily fluctuations in Bitcoin in the double-digit range are not uncommon, and after the rally, setbacks of 20 or 30 percent would not be a surprise. This applies even more to the smaller altcoins. A sad example was recently provided by XRP. The long second and third largest coin sagged by more than 60 percent in the past 30 days after allegations by the US Securities and Exchange Commission against Ripple emerged.
Ethereum performs better than Bitcoin
The situation with Ethereum looks a little different. With the jump of almost 50 percent on a weekly basis, the market capitalization climbed back over the threshold of 100 billion dollars. The price is gradually approaching the all-time high of $ 1,400 that was reached around three years ago.
ETH / USD (Ether, Ethereum / Dollar) cryptocurrency
Course provider: Bitstamp
Important to know: In contrast to Bitcoin, for example, Ethereum is not a pure crypto currency, but a digital platform. A comparison with an industrial metal of the crypto markets would be more appropriate. Because developers can create their own programs on the Ethereum blockchain, so-called “Distributes Apps” or also called Dapps. Especially the decentralized financial applications (DeFi), which have been booming for months, are generating a lot of imagination. Unlike in the past, middlemen are no longer necessary for financial applications such as insurance, betting or credit. Transactions are executed automatically as soon as the specified conditions are met. An example would be if a friend receives 100 euros if the Dax is quoted over 14,500 points on the last trading day in January and at the same time the temperatures in Munich are below 0 degrees according to wetter.com. Such, also much more complex applications can be recorded in smart contracts.
In the meantime, Ethereum has risen to become the largest blockchain network and, with the transition to Ethereum 2.0 in December, laid the foundation for further growth. The advantage: While the network’s transaction capacity was previously limited to around 15 transactions per second, several thousand per second will soon be possible. Ethereum has therefore developed significantly better than Bitcoin in the past few weeks and months. The recent decision by the CME to introduce an Ethereum future on February 8th was also well received.
No entry courses at the moment
If you want to gamble here, you should always ask yourself what is included in the prices. Both the potential of the Ethereum platform and the transition to Ethereum 2.0 have long been known. The introduction of the future also harbors risks: when the first Bitcoin future was launched in mid-December 2017, the Bitcoin also almost reached its record high and a long downward phase began. This does not necessarily have to be the case with Ethereum. However, the price has risen sharply recently, and the flagpole is reminiscent of the starting position three years ago. If anything, setbacks to $ 800 or $ 700 are a good start.
The final question that remains is where you can trade Ethereum at all. In Germany, the issuer Vontobel repeatedly offers products in the certificate sector. Among the brokers, Etoro was the first in the crypto sector and has since expanded its range significantly. Continuous tradability and the avoidance of trading failures are always important, which can be decided positively for both companies. Anyone who operates with leverage in Ethereum, but also Bitcoin, should always remember that the leverage works in both directions and consider beforehand what losses you might want to bear. Because volatility is likely to remain high.
Daniel Saurenz runs the stock exchange portal Feingold Research with his team. It offers a daily market letter that you can test free of charge for 14 days. Sign in at Info@feingold-research.com or try the stock exchange service under this link out. Training days and coachings can be found NEW under feingold-academy.com