Even though the Ether has managed the market turbulences at the beginning of 2018 very well and can still be seen as an attractive investment: Anyone who has bought Ether (ETH) wants to sell Ethereum again at some point.
A distinction must be made between an exchange in fiat money, such as the Euro or the US Dollar, and an exchange in another cryptocurrency. Furthermore, there is also the possibility to conclude a forward trade by selling Ether (without actually owning the coins) and thus profit from falling prices. I will go into all three cases in more detail below.
1. Exchange Ether for fiat money (e.g. Euro or USD)
The exchange in fiat money is simply the sale of your Ether and the credit of the returns in Euro or USD to your bank account, your credit card or any other method of payment of your choice.
Step 1: Determine the best exchange rate
First you should find out which provider offers you the most fiat money (EUR or USD) for your Ether. Although the numerous price tickers usually show a similar price per Ether, the prices on the individual exchanges can differ significantly. For this reason, it is advisable to first take a look at the various online exchanges and their current prices.
One service that offers a great overview is Cryptowatch. Here you can see at a glance the most important crypto exchanges, and even almost in real time the price on which Ether was sold here recently. Below is a screenshot showing the price per Ether at the different exchanges. Only exchanges that exchange in Euros and/or USD are listed. Exchanges that also support other currencies can also be displayed if required.
In this example of Cryptowatch (from 2017) it can be seen that there is a price difference of over 20 EUR per Ether. With Kraken you get 148,09 EUR and with Quoine only 126,74 EUR for each Ether. In addition, the EUR / US Dollar exchange rate should always be kept in mind. With Coinbase¹, for example, a change at a rate of 174.96 USD is the best price per Ether also in EUR, because this corresponds to approx. 154 EUR. However, there is also the currency risk, and later a small exchange fee of USD to EUR in case you want get Euro. However, these amounts are usually insignificantly small and depend on the bank or fiat money Institute that makes your withdrawal.
Step 2: Register at a Crypto Exchange
Once you have determined the best exchange rate at a crypto exchange, you have to create an account there. This is usually free of charge.
Note: If you are thinking about trading more frequently with Ether on exchanges, we also recommend an account with a service like Cryptowatch. There you can buy or sell your Ether directly at the desired exchange with a few clicks. However, this service costs about 15 USD/month. So it’s only worth it if you want to trade Ether more regularly.
Step 3: Sell Ethereum on an crypto exchange platform
After you have registered at a crypto exchange platform or service provider for Ethereum, e.g. Coinbase¹, you can sell your ETH there.
If you want to sell Ethereum from your local offline wallet there, you must first “transfer” it to your Coinbase online wallet. First determine the ETH address of your online wallet.
Afterwards open your offline wallet (e.g. MIST) and click on “send” there.
Then enter the ETH address of your Coinbase online wallet. Afterwards enter the amount of Ether you would like to transfer and click on “Send”.
The defined amount of Ether is then transferred to your Coinbase online wallet. In Coinbase, you can then sell Ethereum to Coinbase via the menu item “Sell”. The amount in Euro or USD will then be credited to your bank account.
2. Exchange Ethers into other cryptocurrencies
The procedure for selling Ether in other cryptocurrencies is a bit easier than exchanging it for fiat money. There are basically two possibilities.
Option 1: Exchange via exchange platform
Similar to exchanging Ether for fiat money, an exchange platform can also be used when exchanging for another cryptocurrencies. Cryptowatch helps you to find the best platform for a currency pair. The following example shows under which conditions Ether can be exchanged for Ripple on Binance¹ or Bittrex.
This option can make sense if you have already deposited your ETH credit in an online account at one of the crypto exchanges. Please consider that this is not advisable. The credit can disappear very quickly from the platform in the event of a hacker attack. Howerver, in this example, due to the availability of the coins in the online wallet of the platform, you are only one trade away from owning the new currency.
Option 2: Exchange via crypto-exchange
If you keep your ETH balance in your own wallet and therefore not within the control of a central institution (which is recommended), it would be quite complicated to do the exchange via an exchange platform. First you would have to transfer the balance of Ether to a exchange platform, exchange it there and then transfer the new currency to another wallet. In addition, the transfer of credit between different wallets and service providers can incur fees that make the exchange very costly. If you want to exchange Ether directly from one wallet into another currency (and another wallet), exchange service providers such as Changelly¹ are recommended.
Consider: In addition to the Ethereum Wallet, you will also need a wallet of the currency you wish to buy.
After entering the two currencies and the wallet addresses, the transaction can be started. The exchange rate offered by Changelly was quite similar to that offered by the crypto exchanges at the time we tested it. At Changelly, we got 98.5 ripples for 0.1044 Ethers. With a direct exchange at Binance we got approx. 1.5 ripple (about 1.5% more) at the same time. You do not have to register with Changelly and you save the fees which may be incurred when transferring from the currency exchange to the Wallet.
3. Conduct a forward contract for the sale of Ether
As a third option, I have included the sale of Ether as a forward trade through the use of CFDs. CFD stands for Contract of Difference. That’s an agreement between two parties on the difference between the current and future value of an object. The parties shall specify the underlying object of the transaction. The object is therefore often called an underlying. For example, shares, commodities or even cryptocurrencies can serve as the underlying. It is important to note that when trading CFDs you do not physically own the underlying (in our case Ether). The value of the CFD is only linked to the performance of the Ether.
Assuming you want to bet on a falling price of Ethereum. Then you would take a selling position at an Ethereum CFD. If the Ethereum price at the end of the contract period is less than the price at the beginning, you will receive the difference. Optionally, a leverage can often be defined for such a transaction. The leverage multiplies the profit achieved, but also a possible loss in value.
Opportunities and risks in trading CFDs
As described above, it is possible to profit from both rising and falling prices with a CFD (and lose money if the course goes into the wrong direction). Other advantages of trading cryptocurrencies with CFDs are that no wallet is needed, the CFD traders are usually regulated and there is often the possibility to multiply the profits with a lever. These advantages are contrasted by the fact that the functionality of CFDs is not easy to understand. Because of that the loss rate (up to max. 100% of the capital investment) is often slightly underestimated when using a lever.
For this reason, it is very important that you familiarize yourself with the functionality of CFDs before trading. A CFD Broker offering a Training-Account and a 24/7 information hotline for this purpose is Plus500². The service provider also has a very clear platform and charges no commissions for trading CFDs. Financing is done via the spread, i.e. the difference between the purchase price and the sales price of the contracts.
|²Affiliate link. 80.5 % of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Plus500UK Ltd authorized & regulated by the FCA (#509909). CFDs are complex instruments and are associated with the high risk of losing money quickly due to the leverage effect. Between 74 % and 89 % of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.|
If you want to exchange ETH for fiat currency, you should first check which exchange platform offers you the best price. Cryptowatch can be very helpful here. Afterwards you can register at the respective exchange service provider, such as Coinbase¹ and exchange your Ether for Euro.
In case you want to exchange Ether for another crypto currency, you can do this either via an crypto exchange like Binance¹ or via a crypto exchange service like Changelly¹. Which option is beneficial for you depends on where your Ethers are stored and into which cryptocurrency you would like to exchange them.
If you don’t want to sell Ethereum physically, but want to profit from falling prices at short notice, then CFDs are the right instrument. For example, you can trade Ethereum-based CFDs on Plus500². The platform also gives you the opportunity to learn more about how CFDs and other financial products work.
Please note: Just as with the crypto currencies themselves, CFDs are subject to high price fluctuations (volatility). This means that you should only invest the money that you are prepared to lose in the worst case. Furthermore, this contribution does not constitute investment advice.
I wish you a lot of fun and success!
|Note: The content on ethblog.de is for information purposes only and does not constitute investment advice or any other recommendation within the meaning of the Securities Trading Act.|
Here’s how Synthetix is tackling Ethereum’s congestion, high gas costs
Ethereum has been very popular this year, not usually for all the right reasons, however, since network congestion and high gas costs have often kept it in the limelight. While the reason for these issues accelerating was the boom in Decentralized Finance [DeFi] protocols on Ethereum, some projects have already started to work on a solution, like Synthetix [SNX].
Synthetix, along with other DeFi platforms like Uniswap, Aave, and Curve, have been working closely to roll out scaling solutions. According to a recent update, Synthetix to was struggling under the burden of high fees, before it upgraded to a primitive version of L2 scaling on 24 September. Dubbed the ‘Fomalhaut’ upgrade, it is the first phase of L2 migration to Optimistic Ethereum [the Layer 2 solution]. According to Synthetix’s blog,
“It will be an incentivized testnet aimed at alleviating gas costs for small SNX stakers.”
This would make collecting rewards for small stakes cheaper, in contrast to hundreds of dollars paid previously.
Following this update, SNX will release its second upgrade, ‘Deneb,’ on 29 September, which will include steps to reduce the gas fees. The implementation of SIP-83 and SIP-TBC as a part of Deneb, Founder Kain Warwick stated, were direct responses to increased gas costs due to congestion. He added,
“Some of the changes are stop-gaps while we transition to Optimistic Ethereum but included in these two releases is the first step towards L2 Synthetix.”
This will allow Synthetix to deploy new solutions that have been prohibitively expensive to deploy on L1. The hybrid approach will likely take SNX through to the end of the year and will represent the near-to-mid-term future of the project. The next step with Mimosa will see the launch of the Synthetic futures testnet competition.
With Synthetix laying out a plan to tackle congestion and high fee solutions, it has also managed to grab the attention of the DeFi community. With the growing prominence of scaling solutions and DeFi, SNX has also achieved listings on Bitfinex and Gemini.
Bullish? On-Exchange Bitcoin Declines While Whales Accumulate (Report)
A recent report suggests that the amount of Bitcoin stored on exchanges is declining while BTC whales increase their holdings and that’s bullish for Bitcoin’s price.
The paper also highlighted that investors have a much larger time horizon for their holdings now compared to previous years.
Bitcoin Stored On Exchanges Drop
In its latest report shared with CryptoPotato on Bitcoin investors’ behavior, the popular research company Digital Delphi explored the number of bitcoins stored on cryptocurrency exchanges. The document indicated that if the BTC stock on platforms increases, it could put sell pressure.
However, this isn’t necessarily the case during bull runs, as retail investors often “leave BTC on exchanges and traders use BTC as margin collateral.” Alternatively, in case the asset price rises while the stock on exchange decreases, this typically implies an accumulation trend.
The report indicated that Bitcoin stored on exchanges marked an all-time high of 2.96 million in mid-February. Since then, the trend has reversed, and the number has dropped to below 2.6 million.
Digital Delphi argued that the reason behind this decrease of BTC on exchanges is because investors are most likely preparing for a longer-term holding period. More importantly, though, the paper highlighted a substantial decline in speculative trading interest in Bitcoin, while the HODLing mentality has increased.
“Unlike the 2019 price uptrend, which coincided with BTC stock increasing, this current trend has seen a divergence between BTC stock and price. This suggests a more sustainable move upwards for BTC, in comparison to that of 2019, as data indicates a holder base with longer time horizons.”
Bitcoin Whales Haven’t Slowed Down Accumulating
Digital Delphi’s data reaffirmed previous reports that Bitcoin whales, meaning addresses containing between 1,000 and 10,000 BTC, continue to accumulate large portions. The company outlined that whales have been on a shopping spree since the start of 2020, as their holdings have increased by 9% YTD.
Moreover, the US Federal Reserve’s actions to print extensive amounts of dollars since the start of the COVID-19 pandemic have accelerated whales’ accumulations.
“Since the USD M2 supply expansion in March, there has been a 7% increase in whale holdings.”
According to the document, this only emphasizes the narrative that Bitcoin serves as a hedge against dollar inflation, and “the smart money is clearly betting on this.” It’s worth noting that prominent US investor Paul Tudor Jones III purchased BTC earlier this year to protect himself against precisely the rising inflation.
US Crypto Tax Avoiders Beware: The IRS Updates 1040 Tax Form
The Internal Revenue Service (IRS) seems to have found a way to block crypto tax evasion, following an update of its tax form.
IRS: No Excuses for Crypto Traders
According to the Wall Street Journal on Friday (September 25, 2020), the IRS is planning to alter its 1040 tax form. The revised tax form will see cryptocurrency holders give a straight answer about their crypto activities.
The IRS has been relentlessly pursuing crypto investors to disclose transactions, as it suspects that many taxpayers were guilty of tax evasion. However, the tax administrator looks like it has found a way to make all Bitcoin holders accountable.
Presently, the tax form will mandate crypto traders to answer a” yes or no” to the following question:
“At any time during 2020, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?”
What makes the update interesting is the placement of the above question. Prior to the revised tax form, the question appeared in a section where taxpayers were not mandated to fill the answer. However, the question’s position in the altered tax form just below the taxpayer’s name and address leaves no room for excuses or oversight on the part of the crypto trader.
Reacting to the altered form of 1040 was Ed Zollars:
“This placement is unprecedented and will make it easier for the IRS to win cases against taxpayers who check ‘No’ when they should check ‘Yes”
There have been complaints in the past about the lack of a robust regulatory framework for crypto tax filings. In October 2019, the IRS published new tax guidelines that would supposedly make it easier for crypto investors to file taxes. The U.S. tax agency also sent reminder letters to crypto holders. Earlier in September, the IRS announced a payment of $625,000 to anyone who could crack Monero and Bitcoin’s lightning network.
Governments Keen on Crypto Taxation
While the IRS seems to have devised a means to trap crypto holders, more countries are introducing crypto tax laws and clamping down on offenders.
As reported by CryptoPotato in April, Spain’s tax administrator sent out notices to 66,000 crypto investors, as against the 14,000 notices sent in 2019. South Korea, on the other hand, has been unsteady about taxing cryptocurrency.
Earlier in 2020, South Korea’s Ministry of Finance and Strategy revealed that there were no intentions to tax crypto profits. However, reports emerged that the Ministry was considering imposing a 20% tax on profits from crypto trading. In June, the country’s Finance Minister called for the imposition of tax on cryptocurrency trading gains.
Australia’s tax agency, the Australian Taxation Office (ATO), sent out reminders to 350,000 crypto traders in March about their tax obligations. According to the ATO, crypto investors were to keep a comprehensive record of their trading activities for ease of tax payment.
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