Here’s what you should know before trading ETH/JPY

As part of its ever-growing selection of crypto assets, eToro is now adding several crypto/fiat pairs to its trading and investing platform. One such pair is the ETH/JPY, which pins Ethereum against the Japanese Yen. The ETHJPY financial instrument presents traders and investors on the platform with another form of diversifying their portfolios and exploring new ways to try and utilise the volatility of both the crypto and the foreign exchange markets.

Cryptocurrencies are bought and sold around the world, using various fiat currencies. While many exchanges offer traders and investors the option of using different currencies to purchase their crypto, pairing a cryptocurrency with a traditional fiat currency can also be used as a financial instrument. The ETH JPY pair is part of the launch of a variety of crypto/fiat pairs on eToro, pinning some of the world’s leading crypto assets against major currencies.

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.

Ethereum: A blockchain giant

Ethereum is the second-largest cryptocurrency by market cap, and arguably the largest blockchain network in the world. Unlike Bitcoin and other cryptocurrencies, Ethereum was created first to be a blockchain platform for developers, and not to be used exclusively as a payment service. However, because the Ethereum network uses its native Ether token as a means of transferring funds, the Ether token grew tremendously to position its market cap as second only to that of Bitcoin.

However, Ethereum’s actual market cap might be even higher than that of Bitcoin, due to the basic nature and possibilities available on the Ethereum platform. One popular use for the Ethereum blockchain is creating new cryptocurrencies and holding Initial Coin Offerings to fund the companies behind them. When doing so, companies need to sell their new tokens in exchange for Ether tokens. Essentially, while using other names, these new tokens are still using the Ethereum platform, which means that the combined market cap of all cryptocurrencies built on Ethereum could be greater than that of Bitcoin.

Japan: The crypto crackdown

Cryptocurrencies have been very popular in Japan, with several major exchanges either founded or opening branches in the country. Being one of the world’s most influential economies, a strong presence in Japan could mean good things for the crypto market. However, Japanese authorities have recently been restricting and regulating crypto trading in the country following a significant event.

In January 2018, the largest-ever crypto-related hack occurred in Japan, when more than $500 million was stolen from the popular exchange Coincheck. The hack prompted authorities to impose new restrictions on crypto trading, such as demanding that exchanges provide proof of their security measures and putting in place anti-money-laundering practices. After Japanese authorities demanded exchanges halt the opening of all new accounts pending the implementation of the aforementioned anti-money-laundering measures, Bitcoin plummeted 8%, demonstrating just how impactful the Japanese market is.

However, Japan is still a major cryptocurrency hub, and the recent crackdown could end up eventually strengthening the market, as the new measures will make it safer for both traders and exchanges.

How to trade ETH/JPY on eToro

When paired together, Ethereum and the Japanese Yen present traders and investors with a fresh instrument that can enable them potentially to utilise volatility on either side of the pair. Since the ETH JPY pair represents the value of a single Ethereum token in Yen, those who believe the former will strengthen against the latter could open a long (BUY) position for this instrument. Those who think the opposite, should open a short (SELL) position. This crypto/fiat pair is another addition to eToro’s continuously-expanding selection of crypto-related assets and can add diversity to both crypto and currency traders’ 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.