Issued back in 2015, Ether is currently the second largest cryptocurrency by market cap, after Bitcoin. It is the token fueling the Ethereum platform – which is an open sourced software platform based on the blockchain technology that enables developers to build decentralized applications.
Volatility is one of the main advantages and disadvantaged of Ether and cryptocurrencies in general, which is why trading crypto had become so popular. Now that retail investors can trade cryptocurrencies in many places, even with brokers like easyMarkets, let’s see what we should take into account when trading digital money.
Trading Ether for a living
Since it is a large-cap token, with over $31 billion in market cap, the good news about trading Ether is that you could use technical strategies like the ones you generally use for forex, stocks, or any other financial instrument.
Alt text: Ether trading in 2019
Price action patterns, support and resistance levels, oscillators and price indicators, all work well on Ether thanks to the high liquidity of more than $9 billion a day, according to the latest data on coinmarketcap.com.
Even though Ether is one of the most liquid cryptocurrencies in the market, its volatility is still high, if we compare it to other asset classes. High volatility can result in good trading opportunities if a trader knows how to exploit it.
However, there’s also a downside of volatility, as it could result in losses, when you are not able to anticipate the future market movement and if you don’t use a proper risk management system.
Regulation for cryptocurrencies
One of the main reasons why cryptocurrency trading is still not popular among institutions has to do with regulation. There’s still no regulatory framework at a global scale for digital assets and most of the developed countries are still struggling to find common ground.
The lack of regulation means that traditional exchange platforms for cryptocurrencies do not fall under the supervision of any financial regulator, which raises concerns about security and market manipulation.
That’s the main reason why cryptocurrency trading via brokers, or futures contracts based on cryptocurrencies, are the main tools traders can use to get involved in the cryptocurrency market through a regulated environment.
Ether could be an additional tool to diversify your portfolio since it is uncorrelated with traditional assets. If you are able to withstand the huge amount of volatility that’s normal in the cryptocurrency market, it should be an asset which you can consider.