29 May 2018
Product in the Spotlight: Bitcoin Euro
Dubbed the ‘Single Currency’ at conception, the euro has been around since 2002. Its creation mechanisms are similar to that of any other fiat currency, including being regulated by the European Central Bank (ECB), and being impacted by interest rates. Bitcoin, on the other hand, is a decentralised currency that’s highly volatile and hard to regulate. While regulatory bodies are indeed circulating, the crypto space remains largely ungoverned. Interestingly, despite its widespread use, the euro accounts for only 64% of all currency trading, while the US dollar is at almost 100%. Bitcoin has the power to act as the common ground between the EUR and USD, being a money transfer protocol, while also being a currency. With the Ukraine crisis, Greek debt, Brexit and more factors contributing to the political instability of the Eurozone, it remains to be seen if Bitcoin is able to benefit the EU.
Factors Affecting Bitcoin/Euro Trading PairIf you are trading the BTC/EUR pair, you must know the factors driving the price of the euro. The Eurozone has 17 members, of which only a few are large enough to make a substantial impact on the currency. Germany, France, Italy and Spain are the countries to look out for.
- Prices and Inflation: CPI is the key measure of inflation in the Eurozone. However, the CPI itself doesn’t affect the euro as much as the CPI Flash Estimate and German Preliminary CPI, released two weeks before the CPI. The inflation level forms the basis for monetary policies by the ECB.
- Monetary Policy: The European Central Bank and its decisions regarding interest rates have significant impact on the euro. The ECB press releases and conferences are important events to follow. A higher interest rate is usually associated with higher currency value.
- GDP Release: The overall economic output of the Eurozone affects the value of the euro. The GDP figure is released in the form of quarterly reports, released two months from the quarter end.
- Balance of Payment: A current account deficit will mean more financial capital leaving the country than the amount entering it, which is bad for the currency. Germany and France are the two largest exporters in this area. So, traders should look into the accounts of these countries.