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There is no doubt that if you are looking for a high quality cryptocurrency to buy and hold for the long term, Ethereum (CRYPTO:ETH) is a top choice.
The blockchain network is already the second most valuable and continues to see its popularity grow as applications become more decentralized (dApps) are launched within its ecosystem. It also already accounts for around 20% of the total value of all cryptocurrencies.
Moreover, the blockchain network is expected to receive important updates this year that users, developers, and investors have been waiting for some time.
So there are a ton of potential opportunities with an investment in Ethereum today. And the best part is that right now Ether is trading around 35% off its all-time high.
Therefore, if you want to buy Ethereum today, here are some ways to ensure you maximize your returns.
If you buy Ethereum, make sure it’s for the long term
One of the biggest risks when it comes to investing in cryptocurrencies is that the industry can be quite volatile. However, this risk is much greater for speculators or traders trying to enter and exit positions quickly.
If you believe in the potential of blockchain technology, especially Ethereum, then you know the long-term opportunities are amazing.
It is therefore crucial that you take this approach from the first day you decide to buy. This way, if the price of the coin drops by 20% the next day, you don’t panic and sell. Instead, you will welcome the sale to Ethereum as a chance to buy more and reduce your average cost.
You may want to invest in a registered account like a TFSA
Another way for investors to increase their returns by investing in Ethereum is to use a registered account to save on paying taxes.
In 2020 Ethereum gained 496% and in 2021 it gained 386%. These are incredible gains, but the investors who own the real asset will eventually have to pay taxes on these gains.
An investor who has decided to buy an Ether ETF, such as the CI Galaxy Ethereum ETF (TSX:ETHX.B), can make the same gains as the price of the asset and will not have to pay tax on their gains if they buy it in a TFSA.
And as you can see, with a high-potential, high-growth asset like Ethereum, that could be a significant amount of money saved.
Consider using a DeFi protocol
Using a TFSA is fine. However, the only downside is that you don’t own the actual cryptocurrency, which means you can’t participate in all new projects on the blockchain.
Thus, investors may prefer to buy real Ether and have the option of exchanging it for several other tokens on the Ethereum network. Also, you might want to consider trying decentralized finance (Challenge).
This way, instead of just holding your Ether, you can look for ways to earn a return on your asset while remaining exposed and benefiting when it gains in price.
There are several different DeFi protocols you can consider, all of which offer different risks and rewards. One of the safest would be a loan protocol, but you can also find more complicated DeFi apps that potentially let you earn more, like a decentralized exchange that offers agricultural yield.
Of course, the more rewards you seek to earn, the more risk you need to take, but finding a high-quality, risk-adjusted DeFi protocol is definitely a great way to increase your returns when investing in Ethereum.