This week, kicking into high gear on Monday Madness, we’re going to continue our coverage of international markets, with the most talked-about asset of them all, BTC/USD. But before jumping right into BTC/USD, let’s zoom out and talk about assets as a whole. It appears we are now entering what we’re calling the “Asset Era.” Hard assets, like Gold, and cold-storage Bitcoin, are seeing dramatic price rises, with Gold near its All-Time High in USD, and BTC/USD breaking out of a 2 year downtrend, with July’s monthly candle closing above $10,500, the first time since December of 2017. If you think this comes across as bullish, then you maybe right, and also not alone.
With years and years of loose monetary policy by central banks globally, starting post the 2009 crash (which inspired Bitcoin’s creation, as stated in the genesis block). This explosive increase in the world’s money supply by the Federal Reserve and other major banks, such as the Bank of England, has appeared to be a short term relief to economies around the world.
A thesis to follow is that his new money will find its way into liquid “hard assets,” Stocks, Bonds, Gold, and Bitcoin, which are coincidentally all having historical years. The “Asset Era” is just beginning, as people have typically seen the USD as the safe-haven, but Gold, and now BTC could be seen as the apocalyptic assets, the only ones where the supply is limited, or in Bitcoin’s place, fixed. We could see Dollars, Pounds, Euros, and Yens, flood into these apocalypse assets, as people become more and more scared of central banks erasing one’s wealth, through endless printing of FIAT dollars. As the meme says, the money printer goes BRRR, and now Bitcoin goes BANG.
Jumping into a technical breakdown of the world’s currencies, and digital assets, we’ll cover where everything is at, and possibly where it’s going, but it is essential to understand the macro-economic trends that are happening right now, and not always just focus on the latest 4-hour candle.
BTC/USD, as mentioned before, settled above $11,000, amongst the global USD sell-off. In contrast, the USD dropped to the lowest point since May 2018, leading to many experts believe that Bitcoin will continue to rise in value from the situation of loose monetary policy, and continue to gain significant ground over the next 2-4 years, possibly breaking it’s an all-time high of ~$20,000USD. It’s definitely a time to pay attention to BTC/USD.
Next up is Ethereum, the little brother of Bitcoin, and the world’s second-largest cryptocurrency, also known as the origin of Smart Contracts. ETH/USD is exceptionally bullish as well, as the price draws to a high in 2019 of $361, this has attracted bulls back into the ETH/USD space. The critical point to watch is $400, as both a technical and psychological resistance level, once it breaks $400, all bets are off. The spaceship could be loaded, and headed, as they say in crypto, to the moon. The underlying theme of the rise is BTC/USD is that it’s making new highs on the year, and DeFi is becoming more popular, making it probably a bad bet to go against ETH/USD on the mid-range, long-term.
Jumping right into Forex, let’s discuss the top two most popular pairs, GBP/USD and EUR/USD, first. Starting right with EUR/USD as it just printed a 2+ year high above the 1.1900 price point at the end of the week. This level pushes it closer and closer to the psychological stage of 1.2000, which would have a lot of traders feeling bullish on EUR/USD. Not without stating, EUR/USD has advanced against overall dollar weakness, stemming from factors such as economic recovery and a weak US Jobs outlook, and yet another round of US Fiscal Stimulus. Overall with the RSI of EUR/USD showing it in the overbought territory, we could see a slight correction before trying for the 1.2000 breakout, it’s definitely something to watch.
Next is the GBP/USD, which has also recently made gains against the USD dollar, could see some sliding down against the pair over the coming weeks, with the BoE meeting coming up. Multiple analysts are warning about chasting the Pound, ahead of this upcoming monetary policy meeting at the Bank of England. Just like the EUR/USD pair, the GBP/USD pair has made gains against the USD. Still, both pairs could see drawdowns soon because of technical indicators, psychological resistances, and macro-economic policies, such as central banks. Both are something to keep a close eye on in the coming weeks.
Lastly, we’re going to wrap up with USD/JPY, where the USD rallied hard against the Japanese Yen during trading on Friday back to the 105 level. This 105 level was a significant turnaround, but global selling pressure on the USD, might not be enough to hold support against the JPY, even as Japan’s economic numbers continue to look bleak. At the end of the day, FX markets continue to watch the Federal Reserve closely, as it is the kingmaker. Something to keep in mind, is what digital currencies do against the USD as FX markets play out. The big take away is, the world is entering a new era, an era where funds and individuals can make a large amount of profit during these transitional economic periods, and Overbit.com has the tools and resources to allow traders to become successful whatever their strategy is.
This Week of Finance History:
The Bank of England was founded in 1694, and it predates the formation of the United Kingdom, which occurred in 1707. The origin of the BoE was because England needed to borrow 1.2 million pounds to rebuild its fleet after the Battle of Beachy Head in 1690. Lenders exchanged bullion for banknotes, and the funds were raised in just 12 days—those tasked with raising funds incorporated as the Governor and Company of the Bank of England. The BoE remained on the gold standard until 1931. Today, the Bank is one of the “Big Four” banks, along with the US Federal Reserve and the Bank of Japan.
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