Cryptocurrency investment can be tricky, as it differs greatly from conventional stock investment. Many factors come into play when investing in crypto, and it should not be treated as a form of gambling or blindly following hype and meme coins.
Act 1 - Key Factors
There are several key factors to consider before investing in a coin or stock. Technical analysis is essential for short-term investments, while fundamental analysis plays a significant role in long-term investments. Here are some key factors to consider:
1. Revenue
Revenue is a crucial metric for a company. If a company is not generating any revenue or only has minimal earnings, it's best to avoid investing in it. Ethereum, for example, has consistently outperformed others by generating over $15 billion in revenue since its launch.
Why it matters: Revenue is vital for a company's sustainability and profitability in the long term.
2. Staking Ratio
Staking is an important metric for a strong coin. On-chain data provides accurate information about staking. $Ethereum's staking has doubled in size since 2022, thanks to various factors such as narratives and the emergence of players like Liquid Staking Derivatives Platforms (e.g., Lido and Rocket Pool).
Why it matters: Staking indicates a guarantee that asset holders will benefit from staking rewards. It also shows the commitment of users to hold the assets for a certain period.
3. Average Holding Metrics
Average Holding Metrics refer to the duration for which holders keep their assets. Ethereum has an average holding time of 2 years, which is excellent and second only to Bitcoin. Other altcoins are nowhere near Ethereum in this regard.
Why it matters: Average holding metrics help determine how long an asset has been held and is likely to be held. It provides security by ensuring sufficient holders for the asset's future.
4. Total Fees Generated
While many people focus on price and market cap, they often overlook a crucial aspect of cryptocurrency assets: fees generation. If a network fails to generate sufficient fees, it may become obsolete in the future due to a lack of funds for operations. Ethereum has consistently generated substantial fees.
Why it matters: Generating fees is a fundamental income stream for crypto companies. Failure to generate fees can pose long-term challenges.
5. Other Factors
For long-term investments, it is important to consider all factors, such as the total number of addresses and future usability. If a product, token, or coin relies solely on hype without substantial usability in the near future, it's best to avoid it for long-term holding.
Act 2 - Factors That Could Lead to a Price Hike
Certain factors can contribute to a coin's price surge, including $Ethereum. Some key points are:
1. Liquid Staking Derivatives
2. NFT Demand
3. Deflationary Nature
4. Public Acceptance
5. It's a Low-Volatility Altcoin
Act 3 - Price Prediction
Ethereum has solidified its position as the second-largest cryptocurrency and is likely to remain unchallenged in the foreseeable future. With its growing usability, public acceptance, and staking rewards, Ethereum is a crucial digital currency alongside #BTC .
We believe Ethereum has the potential to outperform Bitcoin in the next bull run. While the madness and euphoria of the past may not be repeated, it is not an exaggeration to expect $Ethereum to reach $4,000-$5,000 per token during the next bull run.
Act 4 - Best Time to Invest
For long-term holding, there is no definitive best or worst time. The crypto market offers various options to combat volatility. Here are three investment strategies:
1. SIP (Systematic Investment Plan): Many exchanges currently offer SIP options, allowing you to invest in Ethereum on a monthly basis. This approach helps mitigate volatility and smooths out price fluctuations.
2. DCA (Dollar Cost Averaging): Dollar Cost Averaging is another strategy for long-term holding. If you don't have the option for a monthly SIP or prefer a manual approach, DCA allows you to invest a fixed amount at regular intervals.
3. Lump Sum Investment: If you don't have the luxury of monthly investments but have a limited amount of money to invest, you can opt for a lump sum investment in Ethereum. Ensure you store your coins in a hardware wallet for added security or a software wallet if you consider it safe.
People often choose the wrong type of coins for long-term investment. Long-term investments should balance risk and reward, and we believe $Ethereum is a strong contender. It is still undervalued considering its usability and acceptance. In the long run, fundamentally strong projects will prevail, while others will fade away, making room for new hype-driven coins.
This article is not sponsored by any third party or Binance. The names mentioned are for informative purposes only. We do not endorse any trading practices that may lead to financial loss. Always conduct thorough research before investing in digital assets.
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