Check These 4 Factors Before You Invest in Crypto

by Jul 26, 2022Articles


The crypto market has been recovering in recent weeks.

It’s hard to say, yet, if this will be a sustained rally or whether we will see another leg down in the market.

But if you are investing for long term, then that may not matter.

Buy ETH now, and yes, it may drop further.

But when you consider that our long term target of ETH is $5,000, you can see that we are already in deep value territory.

The most important question is: do you believe in the long term viability of this project?

Why ETH is one of my biggest holdings

When it comes to the “fundamentals” behind any crypto project, there are a few criteria that you need to consider:

1. Its practical use (what problem does this project solve, how will it change things?)

Take Ethereum. In a few short years, a community has sprung up on Ethereum that offers every financial service you could think of.

There are replacements for dollars, automatic exchanges, lending, liquidity pools and asset management.

And we think these are the building blocks for a completely new financial system.

Essentially, it’s a machine for engineering trust. What we are witnessing is a perfect storm of collapsing trust in the integrity and competence of government, bankers, brokers, lawyers and real estate agents… and the arrival of a technology that is opening the way to the codification of money and trust itself.

2. The team behind the project (their level of expertise and scale of resources)

The project was started by a Canadian Russian programmer named Vitalik Buterin.

And the platform he has created truly is a marvel.

Here is a technology that make its possible for anonymous strangers on opposite sides of the planet to exchange value without a bank or
government or anyone else in the middle.

It was Vitalik who recognised to expand on the idea of Bitcoin to develop a whole system of financial services, and he remains the driving force behind Ethereum.

Which raises the question: what if something happens to him?

On June 25, 2017, for example, a fake news report claimed that Vitalik Buterin died in a car crash, causing Ether to lose $4 bln in market value.

The story originated from 4Chan, an anonymous image board.
Although Ethereum retained all of the lost value, the hoax has highlighted the importance of Vitalik to the platform and the whole cryptocurrency and Blockchain community.

3. The strength of their research and development

That said, Ethereum has attracted a huge army of developers that could probably step in.

ETH is renowned for constantly developing and upgrading their network. It’s one of the reasons why this platform has established itself as THE crypto platform.

One of the main catalysts for Ethereum right now is “The Merge”: a transition to a “Proof of Stake” system.

Ethereum currently relies on “Proof of Work”: in this system people compete to validate transactions in order to earn rewards.

It’s a process that requires a huge amount of computer power and is often criticised due to its environmental impact.

With the planned upgrade to Proof of Stake, users will be able to validate transactions according to how many coins they contribute, or stake, to the network.

In return for staking more coins, users have a higher likelihood of being chosen to validate transactions on the network and earn a reward.

It’s a more efficient system….and could allow Ethereum to really scale up in the years ahead.

4. Any competitive advantage (what are they up against and what gives them the edge?)

There are already a host of new platforms emerging that could compete with Ethereum, each with efficient verification methods that could eat into Ethereum’s dominant position.

We’ll talk about these projects more in coming issues.

For now, it’s enough to say that ETH has seen off all challengers.

It continues to benefit from years of development and upgrades, with many of the most exciting projects being built on the platform.

Buy ETH and you are getting exposure to a broad range of developments in crypto: DeFi, the Metaverse, stablecoins and much else besides.

We think the long term potential of ETH is enormous: which is why it is the biggest holding in our portfolios.

The Key Takeaway

There are a great many junk coins in the crypto market. In fact, nearly 90% of the coins on the market will probably disappear over time.

But there are a few projects that have the “fundamentals” to deliver huge returns. And if you can buy into these projects and invest for the long term, you can do well from crypto.

Ethereum is already the bedrock of a new financial system that significantly reduces friction (unnecessary fees, call centres, delays, privacy breaches, and generally antiquated processes) and provides a more modern user experience.

Ethereum based apps could reinvent huge aspects of our day to day lives: from how individuals and companies transact with each other to how our identities are verified.

If you want to find out more about how to buy Ethereum, or the coins that could challenge it’s authority, then head over to the Crypto Traders’ Academy.

The head trader Michael publishes his portfolio each week, along with videos on how he is trading and what he plans to trade next.

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