ETH Outlook | How To Capitalize On Volatility
Bitcoin has received considerable attention from major firms recently, finding substantial positions in corporate balance sheets in Tesla, Square, and MicroStrategy inc., to name a few. MicroStrategy’s investment is now worth nearly 5 billion USD.
Dozens of other firms have also amassed a sizable amount of the crypto asset without garnering as much attention. Private foundations, organizations, numerous ETFs, and Trusts have taken positions worth billions. This is a progressive and dynamic departure from conventional investing practices and has been recognized by some firms as an opportunity for better returns and enhanced capital preservation.
The familiar arguments for Bitcoin as a reserve asset are asymmetric risk-return, a hedge against volatile fiat, or part of a corporate strategy to embrace open technology.
Does this same logic apply with Ethereum?
Ethereum has had numerous updates in the last few years in attempts to improve scalability without sacrificing security. Ether’s speculative future value primarily stems from its underlying technology and aspirations to become the gold standard base layer for transaction automation.
While Bitcoin is being purchased primarily for its attributes as a store of value, due to it being a fixed-supply bearer asset, Ethereums value isn’t drawn solely from this attribute. Owning Ether is not just a gamble on a migration to a decentralized economy but also a level of connectivity and technological advancement that has yet to reach maturity. With radical innovation comes volatility and risk, which corporate treasuries may not be so inclined to put huge sums of capital into right now.
If Bitcoins volatility serves as a deterrent for both institutional and retail traders, Ether is even more pronounced.
Hummingbot Market Making
This isn’t to say you can’t still make money on these price swings. At ProBit Exchange, we continue to evolve our trading protocols and leverage innovative technology, to make the trading process easier, more efficient, and elicit increased profit potential for our community.
Our most recent protocol integration, Hummingbot, enables Probit Exchange users to trade algorithmically via Hummingbot market making bots, simply by adding your ProBit Exchange API key on Hummingbot. This is known as Market Making.
Leveraging Hummingbot, traders can also capitalize on market inefficiencies that have emerged due to discrepancies between the number of cryptocurrency exchanges and digital assets vs cryptocurrency market makers via Arbitrage Trading! This strategy captures risk-free profits by simultaneously buying an asset at a low price and selling at a higher price.
Due to the relative nascency of the digital asset space, this pricing dislocation phenomenon may occur often due to market fragmentation. The Kimchi premium is one well known instance which involves the BTC pricing dislocation between South Korean exchanges and their foreign counterparts.
Hummingbot also features a powerful tool called cross market making, which can be used to capitalize on the price differences on two separate exchanges. Simply put, Hummingbot users can place a buy order on one exchange and a higher sell order on another exchange, of which when both execute, the cross market-making between the exchanges awards YOU a profit.
This service was developed to lower the barrier of entry to the crypto trading space and make the trading process as hands-off as you want it to be. Excited yet? Don’t go putting all your eggs all in one basket with Ether and BTC, check out the following six projects known as Ethereum Killers, which are gaining market share and enjoying a growing positive sentiment.
Polkadot is a blockchain protocol created to support parachain functionality, multiple chains within a single network aimed at encapsulating the unique blockchains under one roof. By tapping into the parallel power provided via the continually growing layer 0 network, Polkadot has all the tools needed to overcome the scalability issues plaguing networks today.
DOT provides utility features including governance, staking, and bonding, and will be featured during the March 16 ProBit Exclusive so this is a great chance to diversify your portfolio with 50% off a top 6 token .
Initially developed on Ethereum, TRX migrated to a personal blockchain in 2018 and has quickly become a clear competitor to Ethereum. In 2019, Tron and Tether came together to create USDT on the Tron blockchain, in the form of a TRC-20 token. This is TRON’s answer to the ERC-20 token and hopes to bolster liquidity on decentralized exchanges.
Tezos, developed by Arthur and Kathleen Breitman, raised nearly $240 million in an ICO in 2017. They exceeded funding expectations by over 10x. The Tezos blockchain was among the early adopters of the PoS consensus mechanism, recognized for its efficiency relative to Bitcoins inexorably linked PoW protocol, but with less security. XTZ holders can commit their tokens for a predetermined amount of time in exchange for the ability to “validate blocks,” granting awards over time. Holders staking at least 8000 tokens are awarded governance rights, enabling direct user influence on the governance of the project.
EOS.IO was created by Block.one in Sep 2017 and has since created 100+ ground-breaking dapps with a growing, active userbase. EOS is the native cryptocurrency for the EOS.IO blockchain network and offers smart contract functionality and industry-leading scalability, with the potential to process nearly one million transactions per second with no fees. EOS is similar to Ethereum in its dapp development capabilities, with the primary distinction being that confirmations are completed with an alternative consensus mechanism.
Stellar (XLM) is the native cryptocurrency for Stellar, an open-source blockchain payment solution, seeking to bridge the gap between financial institutions via blockchain technology and offer cheap transactions in developing markets. Stellar implements the FBA protocol instead of traditional mining networks for transaction validation, producing faster transactions than most other blockchain-based systems.
