Trading ETH to AUD
AUD is a popular currency on the forex markets. One of features which makes it interesting for trading is that it is recognised as a commodity currency. So, when trading the ETH to AUD pair pay special attention to the price movements for commodities specific to Australia.
Also, as the Australian dollar is one of the most traded currencies in the world, it has sufficient levels of liquidity.
What is Ethereum?
Ethereum was introduced in 2015 by a Russian-Canadian programmer Vitaly ‘Vitalik’ Buterin. It is an open-source platform that utilises blockchain technology to create and execute distributed applications (DApps). Users can create or join so-called ‘smart contracts’ directly without third parties, limiting the possibility for fraud.
Ethereum is commonly used as a name of the associated cryptocurrency but in fact, Ethereum is the system or network while Ether or ETH is the native currency. Users need to have Ether when they want to execute a certain transaction through the system.
Some interesting facts about the ETH:
- The Ethereum project was successfully crowdfunded in the middle of 2014 when it raised more than $18 million (£14 million).
- At the end of 2015 Ethereum’s price was slightly below $1 (£0.8), by mid-January 2018, it reached its current peak of $1,432 (£1,132).
- Unlike some other cryptocurrencies, there is no maximum supply cap for Ether.
- Ether can be created through ‘mining’ – users receive a reward when they complete a mathematical task and verify transactions.
- The Ethereum Alliance (EEA) is an organisation developed to enhance the future usability of Ethereum.
- Most of the ICO (Initial Coin Offerings) are hosted on the Ethereum blockchain.
What affects Ethereum’s value?
The factors can be divided into two groups – the ETH related and those affecting the general cryptocurrency market.
Ethereum specific factors are:
- The demand for ETH, which is not driven solely by trading activities.
- The acceptance of the Ethereum system by more established financial institutions.
- The increased adoption of smart contracts hosted on the Ethereum platform and the inflow of new users will increase the demand for ETH.
- The degree of mining profitability.
- Improvements in the Ethereum system in the future.
General factors related to the crypto world:
- Changes in regulatory laws and regulations regarding the legality and usage of cryptocurrencies.
- Potential market manipulation by large participants or so-called crypto whales.
- Speculative trading – on June 22, 2017, a multi-million dollar market sell order crashed the ETH price from above $300 (£240) down to $0.10 (£0.08) in a couple of seconds. Although, the price did bounce back within minutes. One trader reportedly made over $1 million, thanks to an automatic buy order set at $0.10 through which he purchased over 3,000 ETH.
- The number of crypto channels where ETH is available for trading also affect its value.
- The number and strength of ETH competitors.
What is the Australian Dollar (AUD)?
Australian dollar (AUD) became the official currency of Australia in 1966 when it replaced the Australian pound as a legal tender. It is positioned as one of the most popular currencies in the world. Apart from Australia, the AUD is the legal tender in a couple of other countries such as the Christmas Islands, Nauru and Norfolk Island. Also, two countries have pegged their currency to the Australian dollar: Tuvalu and Kiribati.
Which factors affect AUD’s value?
This currency may be under the influence of both, domestic and international factors. Differences in interest rates is one of them. When investors have the opportunity to earn higher interest rates in other countries, they might sell the AUD holdings to buy the currency with a higher return.
The Australian dollar is also categorised as one of the world's commodity currencies. This means that changes in the price of commodities produced and exported from the country will cause fluctuations in the AUD rate. As Australian trading partners need to buy AUD to pay for the goods coming from the country, they affect the demand for the currency. So, lower commodity prices would mean lower demand for AUD, and vice versa. When trading AUD currency pairs such as the ETH to AUD watch the price of the most exported commodities such as the iron ore, wool, copper ore, gold and coal briquettes.
Also, before opening trade positions with the ETH/AUD pair, consider the changes in the economic fundamentals of Australia. Things like the economic growth rate, inflation, unemployment, sentiment and consumer confidence may have a major influence on the AUD value and Ethereum to AUD. In addition, unexpected disasters such as the bushfire may adversely affect the AUD value in the short run.
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