eToro
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Trading the ETH/BTC cryptocurrency pair: What you should know

As part of eToro’s ongoing efforts to present its clients with exposure to new markets and diversified trading and investment options, the cryptocurrency pair Ethereum/Bitcoin (ETH/BTC) is now available on the eToro platform (with Ethereum (Ether) as the base cryptocurrency and Bitcoin as the quote). eToro clients who believe that Ethereum will go up in value against the Bitcoin could open a long (BUY) position on ETH BTC, or if they believe the opposite, a short (SELL) position.

65% 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.

This is not investment advice.

As the cryptocurrency market becomes more widespread and accessible, it is only natural that an increasing number of financial instruments associated with the market will be made available to traders and investors. While the practice of exchanging one cryptocurrency for another has been around since the crypto market expanded beyond being just about Bitcoin, pairing two cryptocurrencies to serve as a financial instrument for trading and investing is a relatively new concept.

What drives the ETH/BTC pair’s price?

As opposed to fiat currency pairs, in which each side of the pair relates to its respective country’s economy, both sides of the ETHBTC instrument could be exposed to similar factors. However, since trades and investors opening positions for ETH BTC obviously favour one of its sides over the other, it is important to go over some of the factors that could have more impact on one of the cryptos than the other:

  1. Mainstream acceptance: Bitcoin is still the most dominant cryptocurrency in the world – and even more so when stepping outside the realm of crypto and blockchain enthusiasts. Therefore, it is usually the center of the debate when discussing the introduction of cryptos into the mainstream financial world – and could be impacted by news relating to the rejection or acceptance of the notion by a leading financial institution.
  2. Blockchain adoption: One of the things that separates Ethereum from Bitcoin is the fact that it is much more than just a platform for transferring funds. The Ethereum platform was created to give developers access to the realm of blockchain, enabling them to create blockchain apps of their own. Therefore, news relating to the technology itself, rather than the cryptocurrencies which rely upon it, could have a greater impact on Ethereum than on Bitcoin.
  3. Bitcoin-based financial instruments: One of the factors which can generate strong reactions in the Bitcoin chart is when it is being considered for inclusion in a mainstream market. For example, attempts to submit a Bitcoin ETF that were rejected, created negative momentum for the crypto. In contrast, when Bitcoin futures contracts were first announced – it gave Bitcoin a positive boost.
  4. Ethereum-based apps and ICOs: Since the Ethereum platform enables developers to create blockchain apps, often the success of an app could lead to an increase in Ethereum price, as was the case with the launch of CryptoKitties in 2017. In addition, the Ethereum platform is often used as a basis for creating other cryptocurrencies, which sometimes raise funds through an Initial Coin Offering (ICO). Since purchasing the new coins required using the Ether token, a successful ICO can cause an increase in demand for Ether.

Trading ETH/BTC on eToro

The fiat currency exchange market is the largest in the world, with trillions changing hands every day. The volumes in the cryptocurrency market are still nowhere near those numbers, since it is still a relatively new market that is constantly developing. eToro will continue to expand its cryptocurrency offerings and enable its clients to pit cryptos against one another, as part of a balanced trading portfolio. ETHBTC, which pairs two of the largest cryptos, Ethereum and Bitcoin, will no doubt serve the needs of many crypto traders looking for new ways to diversify their portfolios.

65% 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.

This is not investment advice.

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