Investing in EOS/JPY: What to consider
The EOSJPY value represents the price of a single EOS token in Japanese Yen. EOS is one of the largest cryptocurrencies in the world (by market cap) and was responsible for the largest ICO of its time, raising $4 billion. The Yen is Japan’s national currency and due to the popularity of cryptocurrencies in that country, is often used for buying and selling cryptocurrencies. Those who believe the EOS JPY price will rise, meaning the EOS price will grow in strength against the Yen, could open a long (BUY) position for this pair. Those who believe the opposite, could open a short (SELL) position.
The EOS/JPY crypto/fiat pair will be open for investment with a limit placed on the daily invested amount. When it reaches its daily limit, it will be closed to new investors and reopened the following day. Closing the investment can be done at any time.
Who should include EOS JPY in their portfolios?
Cryptocurrency traders: Since it is a major cryptocurrency, it is only natural that many crypto traders and investors will include EOS in their portfolios. Those who wish to diversify their portfolios further could also trade EOS/JPY.
Day traders: Currencies are known to show great volatility in a single day, and cryptocurrencies even more so. Traders often try to utilise these price swings over the course of a single day in an attempt to generate short-term profits.
Long-term investors: Alongside daily volatility, cryptocurrencies could also display long-term trends. Those who believe the EOS chart will show strength against the Yen in the long run, could consider EOSJPY as an investment option.
Asian market investors: Some investors like to stay “close to home.” Since both EOS and the JPY are located in Asia (Hong Kong and Japan, respectively), Asian traders might feel more comfortable to trade EOSJPY.
What drives the EOSJPY price?
When considering what drives the price of a financial instrument that combines two markets, it is important to take into account which factors can generate volatility for each of the instrument’s components. The cryptocurrency and foreign currency markets as a whole could each be affected by different factors, and EOS and the Yen also have specific factors that could impact their price. Here are some examples:
The Bank of Japan: The central authority for dictating and moderating Japan’s economy, The BoJ could have significant impact on the Yen. The raising or lowering of interest rates, and other decisions relating to monetary policy, could also affect the Yen’s strength against other currencies and cryptocurrencies.
The Nikkei: Japan’s economy is heavily dependent on exports, and many of the companies comprising the Nikkei index enjoy higher revenue in Yen when the local currency weakens against the foreign currencies with which they are paid. Therefore, the Yen chart often displays an inverse relationship with the index.
General cryptocurrency trends: While growing in size and variety over the years, the cryptocurrency market is still somewhat self-contained, and often affected by various factors as a whole. Therefore, it is quite common to see the majority, or even all major cryptocurrencies moving in the same directions. Such a market-wide trend is likely to impact EOS’ price against the Yen.
Blockchain adoption: The EOS token serves as the cryptocurrency for the EOS.IO operating system, created by Hong Kong-based company block.one. This means that while EOS could be impacted by factors relating to the crypto market, it could also be affected by the blockchain industry. As the technology becomes more widespread, developers could be inclined to use the EOS.IO operating system for creating their blockchain apps, potentially contributing to the strength of the EOS token.
Asia and the crypto market
The relationship between Asian countries and the crypto market is quite complicated. On the one hand, cryptocurrencies are extremely popular in Japan, Korea, Hong Kong and China (which at one point was responsible for 75% of the world’s Bitcoin mining). On the other, various countries in Asia have put measures in place to regulate the market, imposing various restrictions on traders and cryptocurrency exchanges.
Japan presents a relevant example, since it was home to the largest hack ever of a crypto exchange. In January,2018, hackers were able to steal $500 million in cryptocurrencies from popular cryptocurrency Coincheck, prompting authorities to impose measures on the country’s crypto exchanges. While designed to ultimately increase the security of the crypto market, the initial crackdown had a negative impact, including an 8% drop by Bitcoin, following an order to freeze new accounts pending the implementation of anti-money laundering measures.
How investing in EOS/JPY will diversify your crypto portfolio
Since the cryptocurrency market is quite homogenous at times, it is sometimes difficult to create a portfolio comprising only cryptos. Therefore, the pairing of a fiat currency with a cryptocurrency could add another form of diversification for crypto traders and investors, wishing to expand the scope of their portfolios, while still focusing on the crypto market. The large selection of cryptos and crypto/fiat currency pairs on eToro gives investors the ability to stay true to the market of their choice while still being able to expand their portfolios’ diversity.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 62% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
This content is for informational and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results.