Thanks for joining us for another weekly edition of Overbit Insights. With the start of Q4 just a few days behind us, it seems market activity is already starting to heat up, so we’ll jump right in.
Continuing on with the theme of the market heating up, our first story of today is about Bitcoin. In welcome news for most, the world’s most popular cryptocurrency has once again cleared the $11,000 market, currently sitting near $11,4000. Many believe this pump was brought on by recent news that Square, the massive payment processor behind CashApp, transferred more than $50 million dollars of their balance sheet from cash into Bitcoin. For day-traders, this move of a few per cent for Bitcoin is not exactly something to shout about from the rooftops, especially with several other coins in the top 10 having outperformed BTCUSD in the last few days. What is critical, though, is the fact that this small-percentage move pushed Bitcoin over the massively significant level of $11,000. This resistance is one that Bitcoin historically has had a tough time staying above - only closing the day above this level for a few weeks in its decade of existence. As we said to start, Q4 is typically when markets really start to build momentum for their new trends. Assuming this holds true, we believe this clearing of $11,000 could be the start of another bull run for Bitcoin and cryptocurrency as a whole. Coin Metrics, a prominent market research firm, seemed to agree. “If it continues as it did in 2017, 2021 should be an interesting year,” they said.
In a switch to the legal side of cryptocurrency, we move onto a recent release from the US Department of Justice (DOJ) - the “Cryptocurrency Enforcement Framework”. On October 9th, the DOJ released an 83 page PDF which aims to serve as a reference guide for law enforcement authorities on cryptocurrency markets and usage. The DOJ divided this report into three separate parts, “Threat Overview”, “Law and Regulation” and “Ongoing Challenges and Future Strategies”. A bit self-explanatory, but it seems the goal of this release is to document the threats associated with cryptocurrency, describe the current legal framework concerning these threats, and discuss how the future frameworks might adapt to the ever-growing cryptocurrency space.
It seems this report is nothing rushed - it was written by the Cyber Digital Task Force, which was formed in 2018 by US Attorney General William Barr. It seems they are not taking the emerging technology lightly, either, describing it as the “next phase of the Internet’s evolution,”. As a whole, the US DOJ focused on the challenges that DeFi and privacy coins pose to the existing law enforcement institutions. Their main concern is the ability to evade anti-money laundering laws through these decentralized and privacy-preserving technologies. Crypto News Flash had a very succinct way of putting it: “In general, the report moves between two points: cryptocurrencies have the potential to be a positive change in the world, however, on the other side, they are used for crime and should therefore be regulated.”. As much as cryptocurrency enthusiasts want to avoid the oversight of government and law-enforcement authorities, it seems this will be a battle that nobody involved can avoid.
To close out the week, we move over to the forex markets, and one of the top headlines is the upcoming US Election and how stimulus policies are shaping up at the Federal Reserve. Being that the US dollar is a significant catalyst for commodity and precious metal markets, it’s important to follow its action as it relates to prices of other commodities. The EU /USD is one of the big pairs to watch, and the sentiment for the EUR / USD continues to fall with increasing COVID-19 cases in Europe and uncertainty with Brexit. On next Thursday and Friday, the EU leaders will meet to discuss several topics, with Brexit at the top of the agenda. Typically these talks tend to affect the British Pound, but we could see an impact on the EUR/USD pair as well. The Euro has been floating since this July when the EU approved the 750 billion EURO. During next week it will be critical to watch for Europe’s most prominent pairs the GBP/USD and EUR/USD. Closing out with the USD/JPY, we’ve seen US unemployment claims falling less than expected, which could suggest an ill labour market in the US, leaving the USD/JPY pair continuing to trend in a limited range, with a slight bullish bias.
Moreover, smart investors will continue to watch the upcoming week for continued talks of “recovery” and “stimulus” from the major central banks of the world, with a potential climax happening next month on November 3rd, 2020, the US Presidential Election. As always, Overbit.com is here to provide a top-tier trading experience, and access to all the pairs that matter, no matter which side of the market you are on.
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