The ETH/EUR pair started 2018 at a value of €638 on January 1, 2018. Over the next couple of weeks, it performed well, with the pair trading at €1045 on January 15, 2018.
After that, cryptocurrency prices declined across the board and the ETH/EUR pair was naturally affected too. Japan’s regulatory crackdown, following the NEM token theft uproar which saw 523 tokens disappear unlawfully, led to all crypto assets performing poorly over the course of the month. By the second week of February, the pair was trading at €546. From April onwards, the pair took on momentum but with lesser steam. Towards the end of the month, on April 30, 2018, ETH/EUR was trading at €553. As of May 25, 2018, the pair had gained 6.06% against the euro, reaching a price of €512.
While Ethereum shares a positive correlation with Bitcoin and has the strongest relationship with the Great British Pound (GBP), its relationship with the euro is a weaker one. Recent studies, based on historical data, reveal a correlation factor of -0.03 for the pair, which is negligible. As such, ETH doesn’t seem to have a hedging quality against the euro, but would be beneficial for portfolio diversification, given that ETH has been performing well.
In May 2018, a weak Eurozone PMI report led to poor performance of the EUR/USD pair. The services PMI dipped to 53.9 from 54, with manufacturing output declining to 54.5 from 56.2 and the overall manufacturing PMI to 55.5 from 56.2. However, Benoit Coeuré of the ECB saw no reason to extend QE that did not help the euro in any way. He also refrained from commenting on the prospective new Italian government and stressed that the EU treaties do not cancel debts of euro-area countries.
The Italian political crisis has made the companies wary of investing in the zone. They are not assuming the decline to be temporary. Adding to the woes is the increase in the French ILO unemployment rates, which unexpectedly rose to 9.2% in Q1, from 9.0% in the previous quarter.
A decline in the EUR/USD affects the ETH/EUR too. Investors should take these points into consideration while making trading decisions.