Welcome to this week’s edition of Overbit News. Since there’s always a ton happening in financial markets (sometimes almost too much to cover), we decided to hone in this week on just two of the most dominant trends in finance: Bitcoin, Ethereum and cryptocurrency as a whole rising, and the US Dollar faltering.
To kick off this week, we can see that Bitcoin advanced to highs not seen in nearly two months, with Ethereum following suit, hitting almost three-week highs. These price jumps come off the back of news from Grayscale’s Ethereum Fund, stating that the institution will now officially report its accounting figures to the US Securities and Exchange Commission (SEC). “This voluntary filing should not be confused as an effort to classify Grayscale Ethereum Trust as an exchange-traded fund (ETF),” Grayscale, which is owned by CoinDesk’s parent company Digital Currency Group, wrote in a press release on Monday.
As we’ve written in numerous recent articles, it seems the cryptocurrency markets, and specifically its leaders Bitcoin and Ethereum, are steadily gaining momentum, something these price movements and this news release certainly highlight, but while it’s easy to get caught up in day-to-day price movements, it’s essential to take a macro step-back and realize the big-picture numbers. Bitcoin is up nearly 60% on the year, while Ethereum has posted gains of almost 200%. With new, positive developments coming up every day, especially contrasted against the growing worries of inflationary, fiat currencies, it’s easy to see how we may be standing at the start of a new bull cycle.
This talk of worries about inflationary currency brings us to our closing story of the day – the US Dollar and DXY. Looking at the charts, we see it declining towards a significant level, leading the EUR/USD pair into a considerable level. Right now we see the DXY hovering above support, but a drop-down to the mid 92s would have the next range of support playing at the 91.75 level – a make or break level. Below the 91.75 level, we could see the DXY declining to 2018 lows of 88.25. Historically, DXY and BTC have been inversely correlated, and this certainly seems to be the case now, but we could continue to see this change over time. Alongside Bitcoin, the Euro makes up 57% of the DXY, and therefore has a significant impact on how the DXY moves.
On a macro scale, the strength of the US dollar does not look great as the USD holds almost three-week lows after the US president rolled out a smaller stimulus bill than expected. Joe Manimbo, a senior market analyst at Western Union Business Solutions in Washington DC, said on the day’s FX market closing bell, “The Dollar just retains this soft underbelly on expectations that sooner or later there will be some stimulus out of Washington.”.
With the corner being rounded on the 2020 Fiscal year, governments, companies, and investors are doing their best to hedge losses for the year, whilst also maintaining a sense of normalcy. This year is entirely unprecedented for the global economy, and all things considered, economies around the world are doing their best to recover and “return to normal”. At Overbit.com, we are working to bring you the top news and insights of the week, and you can rest assured that the Overbit team is constantly working to bring to you the top trading products, directly to your fingertips, during these unprecedented times.