I’ve been in this market for many years, and Ethereum is one of my favorite coins to trade. In this article, I’ll give you a great strategy that works just as well for beginners and experts, designed to create long-term, sustainable profits. It will outperform Bitcoin and make outsized returns compared to most investors.
Keep in mind; This is not financial advice. It is purely educational and informational content!
Let’s begin with the basics, and work our way towards a fully formulated Ethereum trading strategy:
How To Successfully Trade Ethereum
First things first: What does “successfully” mean in this case?
Trading ETH successfully means holding ETH when it performs better than Bitcoin and not holding ETH when it performs worse than Bitcoin.
Basically, you want to hold ETH when it goes up more than BTC.
“Why are you talking about Bitcoin…?”
A beginner often looks at the USD price of Ethereum when trying to trade, but that is a mistake…
You need to look at the BTC price of Ethereum! This is why:
If your altcoins do not outperform Bitcoin, the extra risk of holding altcoins is not justified.
Basically, there are two types of risks when investing: Idiosyncratic and systemic risk.
The idiosyncratic risk is the risk that the specific coin carries. For example, the idiosyncratic risk of investing in Ethereum might be the risk of something going wrong when ETH 2.0 is being uploaded and the Ethereum blockchain failing.
The systemic risk is (more or less) the same for all major cryptocurrencies. It is the risk that cryptocurrencies as an asset class carry. For example, one systemic risk is bad regulation. Another is that Bitcoin fails.
“Okey, sure. Why should I care?”
Do you know how altcoins follow Bitcoin? This results in altcoins gaining the idiosyncratic risk of Bitcoin in addition to their own two risks. In some sense, when investing in altcoins we also take on the risk of investing in Bitcoin.
For this reason, we need to justify holding ETH by getting higher returns than we would get by holding Bitcoin. As an investor, you want rewards for taking on the added risk.
If you’re looking for a Bitcoin investing and trading strategy, you should check out this article:
Great, now we have a goal: Outperforming Bitcoin. Let’s move on, and figure out how to reach it:
My ETH Trading and Investing Strategy (Part #1)
There are two parts to my Ethereum strategy: The active strategy and the passive strategy.
Let’s begin with the passive Ethereum strategy, as it is the most important and easiest to start doing.
BTW, if you’re a complete beginner, you should probably stick with this part only until you get some experience investing in crypto…
Also, if you want to know why I think Ethereum is a great long-term investment, read this article.
Anyways, let’s get to it:
My Personal Passive ETH Investment Strategy:
There are two steps to the first part of the strategy for trading and investing in Ethereum. Step one is buying it, and step two is putting it to work.
Step #1 – Buying Ethereum:
- When I started out, I bough my Ethereum with coinbase. This is the best platform for absolute beginners. Use this link to sign up with them now and get $10 (I also receive $10 when you use it).
- After a I got more experience, I started using crypto.com. I still reccomend this app to most people who ask me what platform they should use. I think it is the best options out there for most people. It is super user friendly, has tons of coins to pick and choose from, you can get a VISA card to spend crypto with, you can get lons in the app, you can get a yeild on your crypto, and more.
Crypto.com is much more than a place to buy and sell. It is an ecosystem of awesome stuff you can use to get even more bang for your buck.
What You Need to Do:
1) Download their app “crypto.com” on your phone.
2) Sign up using my referral code to get some free money (and support me):
Referral code: df6qegxu9q
I’ve written an article about how to get started with crypto.com. Check it out here if you need additional instructions (buy Ethereum instead of Bitcoin).
- If you’re more advanced, and need access to a larger set of tools like stop-loss orders, margin and stuff like that, you should go for Binance. They have one of the largest lists of altcoins to invest in, and a ton of tools for active traders. Sign up with them here (referrallink)
Alright, now you have some Ethereum. It’s time to put it to work!
Step #2 – Earning A Yield
Some of the ETH I passively hold I like to earn interest on. For example, one can use NEXO to earn a yield on the ETH you’re holding.
By holding ETH in a nexo wallet, they give you up to 8% p.a., paid daily in ETH.
8% per year might not sound like a big deal, but it is a huge deal. Here’s why:
Let’s say you have 1 ETH and that it is priced at $1,000.
This gives you $1,000 to earn a yield on.
The current rate for Ethereum at nexo is around 8% p.a.
“Okey, so I’m earning 8% p.a on $1,000. That’s $80 per year, right?”
No, that’s not the right way to look at it:
Remember, you earn ETH, not USD.
I truly believe that Ethereum will reach $8000. That’s an 8x from $1,000.
Now, the fact that you earn ETH and not dollars means that everything you earn will 8x in price as well, as long as you keep the ETH, of course, and don’t flip it to dollars immediately.
This means that you can multiply your yield by eight!
In other words, the yield you receive is 8% p.a in Ethereum, but 64% in USD.
The right way to think: you earn a yield of 8% of the price you’re going to sell your coins at.
My ETH Trading Strategy (Part #2)
Let’s get started with the active part of my strategy. This part involves actual trading and requires either that you are skilled at technical analysis or follow someone who does.
I have a free newsletter you can sign up to where I send out technical analyses on Ethereum from time to time; check it out:
Let’s get specific on what I do and how I do it:
I Mainly Trade The ETH / BTC Pair:
I do not care too much about the USD price of ETH, and therefore don’t trade the ETH / USD pair.
I trade the ETH / BTC pair. Specifically, I “swing trade” it.
Basically, I look at the charts and buy ETH or sell ETH with a time frame of 2-12 months.
Let me give you an example of one chart that has made me a lot of money:
Technical Analysis On ETH / BTC:
Below you’ll see the ETH / BTC chart with a “trend channel” drawn on it. I have used this channel to guide my investing for over two years.
Important: When the chart below increases, it means that ETH is outperforming BTC. When it goes down, ETH underperforms BTC.
Red arrows: Places I sold ETH over to BTC. Green arrows: Places I bought ETH with BTC
As you can see, this channel held for multiple years. There were several months between buys and sells, but the gains made were huge.
Important: I do NOT sell everything at the top of the channel and go “all in” at the bottom.
The reason is that there’s always the chance of the channel failing like it did in the summer of 2021. Had I sold everything at the top of the channel, I would have missed out on 65% of potential additional returns.
The problem with the active part of my Ethereum strategy is that it is hard, and most people fail. However, if you do it successfully, there’s huge upside potential.
If you need to learn technical analysis, check out this article I wrote to help beginners get started: “How to read Bitcoin charts like a pro“
Get notifications when I buy/sell Ethereum (and other coins):
I have a premium newsletter where I send out in-depth technical analyses on Bitcoin and several altcoins. I also give weekly updates on my three Bitcoin models, giving investors the current risk of holding Bitcoin on a scale from one to ten.
You Should Consider The Premium Newsletter If:
- You Have More Than $1000 Invested In Crypto
- You Want To Learn More About Crypto Investing
- You Want To Know What I’m Doing (I tell you when, and what, I buy and sell)
- You Want Clear Price Targets And Entry Prices
- You Want Updates On My Bitcoin Models
You Should NOT Join The premium List If:
- You’re Only Playing With Some Change, And Not Serious Money – You’re Better Off Spending The Money On Some More Crypto!
- You’re a Day Trader
- You Don’t Care About Crypto And Just Want To Get Rich Quickly
- You Prefer The Free Stuff – Totally Fine!
The Premium Newsletter Includes (Weekly):
- Updates on my Bitcoin models
- Technical analysis on Bitcoin
- Technical analysis on altcoins including Ethereum, Cardano, Chainlink, Solana and more.
- General market updates
- Alerts when I make significant buys and sells
Most similar offers cost between $149 and $299, which is way too much for most people. After all, you need to make back the money to justify the extra spending!
For this reason, I have priced it at a fraction of that. In addition, you’ll get a FREE TRAIL by signing up TODAY:
Should You Trade Ethereum, Or Just Hold Long Term?
As you can probably guess, I think doing both is the best option. Trading is riskier but offers higher potential returns if done correctly.
Let’s take the chart I showed you above as an example to get an idea of just how much difference trading can make. Let’s say you’re a trading god and perform 100% of your trades successfully (which is totally unrealistic, but this is only meant to give you an idea of how crazy high the potential is).
At each of the red arrows on the chart above, you sell all of your ETH and buy back at the green arrows.
Below you see the return you would produce, compared to the return you would have gotten by holding through it all:
As you can see, trading provides 11x while holding provided 4.5x. Another way of putting it is that trading produces a 150% higher ROI than holding.
However, you will NOT perform this good. No one does.
But the important thing is not to hit 11x. The important thing is to do better than the holders. That’s all you need to focus on as a trader. As long as you made more than 4.5x, it was worth it to trade in this case.
Once again, this was just an example. 4.5x and 11x are not general numbers; they are specific to this example. Also, none of this is financial advice, of course (as mentioned in the introduction.)
Example/Suggestion Of An ETH Investing Strategy:
Let’s say you have $2500 invested in ETH right now. You want to make this money grow fast! Therefore you do the following:
- Sign up with nexo, or something similar, you send over $1250 to the new nexowallet and start passivly earning a nice yield.
- Then you start familiarizing youself with the ETH/BTC chart. You start checking it at least once per week to see if you can figure out the patterns. You might watch other people’s analyses to get inspiration and insight. Maybe you sign up for my free newsletter, or even my premium newsletter if you’re really serious about this thing.
- When you start to recognize some patterns you start making SMALL trades. You should not trade more than 5% of your portfolio in one trade unless you really know what you’re doing.
- After a while, you make more significant trades, and your portfolio grows faster. You start to become efficient at recognizing patterns, and you’re looking at other coins as well as ETH at this point. Your portfolio is growing much quicker now because your trades start to make you more money.
- At some point you book profits. The biggest mistake you can make is to get greedy. You MUST book profits at some point. It is often better to sell too soon than too late, trust me…
Other Ways To Trade Ethereum:
- Day Trading. Buy and sell ETH with high frequency – multiple times per day. This requires high skill, and extreme mental strength. NOT for beginners.
- Futures Trading. Make bets on what the future price of Ethereum will be. This is NOT for beginners either. This is mostly used by “rich people” and institutions. However, for the right people futures trading offer a lot of upside (and risk management options).
- ETHE. You can gain exposure to Ethereum indirectly through Grayscales Ethereum trust. I’ve written an article about it here, but it’s mostly for institutional investors.
- Ethereum-following Securities. You can actually buy stocks that mimic the price of Ethereum, like this one
Summary: Hold 50% and Swingtrade ETH / BTC
Using nexo, or something similar, I earn a 8% p.a yield on 50% of my ETH passively.
For the other 50% of my ETH, I swing trade with respect to Bitcoin, not USD. Trading the ETH / USD pair is for noobs; ETH / BTC is the pros’ focus.
This way, you can actively and passively earn more ETH over time and outperform Bitcoin significantly.
Do You Invest In Crypto?
When investing in traditional markets like stocks and bonds, there’s not too much you can do to increase your ROI significantly.
This is NOT the case in crypto markets.
There ARE ways you can significantly increase ROI. I’ve created a free guide on 4 easy ways to do it.
I do all four of them myself and know for a fact that they can increase ROI by hundreds of percent.