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Ethereum Rises as Investors Bet on China

Written by Alexandra Perry
Posted May 30, 2017 at 4:30PM

For those of you following your digital currency investments closely, you should be celebrating. Ethereum is out of rough water.

The currency entered the holiday weekend in an anxiety-inducing dip. And it wasn't alone. Bitcoin initiated the retreat, prompting most altcoins to follow.

At this point, we can comfortably assume that Bitcoin will continue to influence the price of other altcoins.

But Bitcoin dipping wasn't the only cause of Ethereum's plummet. Ethereum faced a violent correction, dropping $70 dollars in value in a day.

In the past couple of weeks, we have seen a wave of new digital currency investors. This influx pushed Ethereum's value to new heights. Then panic selling started.

It didn't help that leading digital currency exchange Coinbase deterred investors with dozens of functionality issues.

As I type this, we have returned to smooth waters. Ethereum is hovering around $200.

And there is some good news.

China and Ethereum

Hopefully, you remember when Litecoin was introduced to Coinbase.

Almost overnight, Litecoin's value skyrocketed.

This surge didn't need outside collaboration or evidence of Litecoin's profitability. New investors saw it on the exchange and pulled the trigger.

When a digital currency is added to a popular exchange, it becomes accessible to thousands of investors who otherwise wouldn't have invested.

It didn't matter to investors that Litecoin won its coveted spot on Coinbase through its founder, who sits on the Coinbase board. All that mattered was that Litecoin was visible.

This is an important event to note.

It demonstrates the power an exchange has over digital currency prices. When a popular exchange adopts a currency, it increases accessibility. This brings us to China.

China's leading digital currency exchange Huobi is preparing to offer Ethereum. Huobi is one of the biggest Bitcoin traders in the world. And, even though Huobi isn't the first exchange in China to offer Ethereum, its widespread use may prompt a wave of Ethereum buying.

Huobi is adding Ethereum because of heavy investor demand. Huobi also has its own formula, which determined that Ethereum was a good (ahem, profitable) addition — this formula also placed Litecoin and Ripple in the possible additions category, as well.

Now the digital currency world is making bets.

We don't know what the demand for Ethereum will be in China. Currently, the top currency trading for Ethereum is the Korean Won, highlighting a heavy demand for Ethereum in South Korea. The country accounts for 17% of the Ethereum market.

But investors around the world are buying in hopes that Ethereum's price will rise because of demand from China.

No More Dip Selling

Once again, Ethereum's value plummeted only to rise within a few days.

Every time the digital currency world catches fire, Ethereum recovers and shakes off the ashes unscathed.

To be honest, no one knows the long-term profits 100%. And if someone tells you they do, they are lying. All we know is that Ethereum is an incredible technology, a volatile investment, and will take time to reach its full potential.

This is why you don't sell in dips and you ride out the symptoms of growth.

The fact that Ethereum continues to be adopted by mainstream exchanges signifies its long-term value.

Best of luck.

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