The cryptocurrency market has several specific features that are not typical of traditional asset markets. First of all, the high volatility of digital coins is striking. A coin can rise or fall in price by tens of percent in a matter of days or even hours.
It is also noteworthy that price changes occur synchronously and almost the entire market is involved in them. The need to diversify risks when including cryptocurrencies in an investment portfolio becomes critical.
General information about Ethereum
Ethereum is the first universal blockchain platform. Since its launch in 2015, distributed ledger technology has become practical in a wide variety of industries. Ethereum has provided the technical basis for the development and launch of decentralized applications and decentralized finance. Relationships between system participants are built through the use of smart contracts.
The native Ethereum token of the same name is used to pay for the platform services and maintain its functionality. ETH is used as a means of investment, it can be sold, bought, accumulated, used as a means of payment.
The coin consistently holds the second position in the ranking of the largest cryptocurrencies and is traded on almost all cryptocurrency exchanges.
What is Tether (USDT)
Tether (USDT) is classified as a stablecoin, a special class of cryptocurrencies whose value is pegged to the value of another asset. Each USDT coin is backed by a real-life US dollar, which is stored in the reserves of the issuing company.
The role of stablecoins is difficult to overestimate. They are used to protect capital during periods of particularly high market volatility. In the world of virtual assets, they act as a safe-haven asset. Coins with a stable exchange rate are much easier and more convenient to use for international money transfers and everyday payments. Stablecoins greatly simplify cryptocurrency trading in general and the work of cryptocurrency exchanges in particular.
USDT is in the TOP 10 largest cryptocurrencies by market capitalization. It is traded almost everywhere and forms the largest number of Crypto/Crypto trading pairs. For example, finding a marketplace where you can directly convert XMR to ZEN is quite difficult. If the exchange supports both coins, then the exchange can be completed in two steps using USDT as an intermediary coin.
Similarities between Ethereum and Tether
Both assets are based on the blockchain, have properties and functions similar to those of traditional currencies.
Coins are used as a means of payment, an investment tool, they can be bought, sold, exchanged, accumulated and stored.
The issue of both coins is not limited.
Differences between Ethereum and Tether
ETH is based on its own blockchain and falls under the definition of a digital coin. Tether does not have its own blockchain and is a token, more precisely a tokenized fiat currency. USDT tokens exist in several solutions for the Ethereum, Tron, Solana and Algorand blockchains.
USDT is backed by a real asset. Ether itself serves as a collateral asset for other stablecoins.
ETH is very sensitive to market sentiment, it is characterized by high volatility. USDT is a low volatility asset.
The cost of Ethereum is set solely by market factors. The value of USDT is close to 1 US dollar and only slightly deviates from the ratio of 1:1.
ETH is a decentralized cryptocurrency that is not subject to regulation by interested people or organizations. USDT is minted centrally. The issuing company is periodically subjected to inspections by regulatory authorities.
What is the best coin to invest in
All cryptocurrencies are classified as high-risk assets. Therefore, experienced investors do not recommend investing more than 10% (ideally, no more than 5%) of your total portfolio in digital assets. In addition, it is desirable to distribute investments between several coins.
ETH and USDT are invariably included in the list of the most investment-attractive coins and complement each other well.
Ethereum provides more opportunities to make money on the rise in the price of the coin. USDT serves to fix profits. The practice of lending and other financial products from the traditional financial system are increasingly being introduced into the crypto world. In terms of passive income opportunities, USDT looks more attractive.
At this stage, it is most reasonable to invest part of the funds in USDT as a more stable asset, and part in ETH. Moreover, it is very easy to convert USDT to ETH. You will be able to do this as soon as the signals about the stabilization of the situation appear on the market.
Before making any investment decision, do your own market research.