Trading ETH to MXN
The two elements in ETH/MXN pair are Ether, the second largest cryptocurrency, with high volatility and the Mexican Peso, a popular Latin American currency that also brings certain volatility and a suitable level of liquidity.
In the past, ETH to MXN has experienced a fluctuation of more than 100 per cent over the course of a year. In contrast, the pair may move less than 5 per cent within a single week. The types of movements of the Ethereum to Mexican Peso pair depend on the period considered by the traders. So, they can make a profit from trendy movements lasting up to a couple of months or shorter range-bound fluctuations.
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 the 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 ETH
- The Ethereum project was successfully crowdfunded in the middle of 2014 when it raised more than $18m (£14m, €16m).
- At the end of 2015, Ethereum’s price was slightly below $1; by mid-January 2018 it reached its current peak of $1,432.
- 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 Enterprise 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:
- Demand for ETH, which is not driven solely by trading activities.
- Acceptance of the Ethereum system by more established financial institutions.
- Increased adoption of smart contracts hosted on the Ethereum platform and the inflow of new users, which increase the demand for ETH.
- 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 multimillion-dollar market sell order crashed the ETH price from above $300 down to $0.10 in a couple of seconds, although the price did bounce back within minutes. One trader reportedly made more than $1m, thanks to an automatic buy order set at $0.10 through which he purchased more than 3,000 ETH.
- Number of crypto channels where ETH is available for trading.
- Number and strength of ETH competitors.
What is the Mexican Peso (MXN)?
The Mexican peso (MXN) is the legal tender and official currency of Mexico with its origin dating back to the early 19th century. During its existence, the MXN has gone through several redenominations and changes. In addition, certain monetary and fiscal policies by the Mexican authorities positioned the Mexican peso among the top 15 most traded currencies in the world and among the top three most traded currencies in Latin America.
What affects MXN’s value?
One of the most important characteristics of the Mexican economy is that it borders the United States, which means there is a high level of trading volume between the two countries. Consequently, the US dollar exchange rate has a significant impact on the MXN value on the foreign exchange markets. When trading ETH to MXN, check for potential signals by looking at the fluctuation in the USD.
Changes in the geopolitical environment and the sentiment. For example, adverse economic conditions in some of the major exporting partners such as the US may cause a decrease in demand for Mexican goods, which in turn will affect the MXN value.
Higher interest rates in the Mexican economy can increase the demand for MXN peso as investors seek to invest funds in an economy that offers higher yields.
The inflation rate in the domestic economy also has an impact on the MXN, as it leads to higher volatility.
Mexico is among the 15 largest oil producers in the world. Hence, it is very important to watch movements in oil and other natural resources prices when defining the ETH/MXN trading strategy.
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