● Ethereum Supply Running Scarce
● Foreign Investors Predict US Dollar Decline
● EUR/USD Tips Lower
Welcome again to today’s edition of Overbit Insights.
We’ll jump right in with a story on Ethereum for our first potential insight of today. According to a recent report from CoinTelegraph, exchanges’ Ethereum reserves have been plummeting for the last few days.
According to their article, CryptoQuant data reveals that the Ethereum reserves for exchanges have plummeted 27% in just the past 48 hours, with only 8.1 million Ethereum currently sitting in reserves. The first notice of this mass migration of ETH from reserves was reported by Nuggets News’ Alex Saunders, who pointed out a 10% drop in ETH reserves back on January 14th. If the trend continues at its current rate, “Exchanges will run out of ETH in 10 days,” Saunders said.
This has not been a new trend and has been ongoing since mid-May 2020, where exchanges marked an all-time high of 14.1 million Ethereum in their reserve. The same happened with Bitcoin around the same timeframe; however, it appears the recent acceleration for ETH is leaps and bounds above Bitcoin’s current rate.
Nevertheless, it seems clear that demand for Ethereum and ETH has exploded in the past year, and even more so in the past few weeks. Though it’s impossible to predict future price action, Saunders offered a simple notice: “We all know what happened when demand outstripped supply of $BTC”. That being said, it seems Ethereum will be the coin to watch going forward as it continues to consolidate right below resistance, just as Bitcoin did many months ago.
Moving on from the crypto markets, our next story of the day revolves around the US dollar.
According to a recent headline from the Wall Street Journal, foreign investors remain bearish on the dollar going forward, especially under a Biden Presidency. Despite a yearlong bearish trend, it seems that pessimism for the US dollar continues to be the mood for investors, mostly as it hovers near its weakest level in three years.
Going forward the US is just days away from the Biden inauguration and a Biden presidency - something that many investors and traders hoped would bring a return to normal and perhaps mark a shift for the US dollar’s bearish trend. However, with a riot in the US Capitol just days behind us, elevated coronavirus infection rates, and a continuing economic slowdown, the odds seem to be slimming. On top of all that, Biden’s newly-unveiled financial proposal nearly doubles the previously-agreed upon one, something that will undoubtedly weigh on the minds of greenback bulls.
The United States needs a robust economic recovery to make a comeback for its currency, though this is very difficult without large amounts of direct cash infusions into the economy. That being said, we could continue to see the US dollar being bearish in the short-term, as this Wall Street Journal article reported until the medium-to-long term effects of the economic recovery begin to display themselves.
Closing out today’s edition of Overbit Insights, we take another look at the currency market, this time at the continued slide of the Euro and the EUR/USD forex pair.
The EUR/USD forex pair rate extended losses for three straight trading sessions to close out this previous week. The result was reaching a new six-week low at $1.2112. Though the US dollar has had a bounce from its recent 2018 lows, this is still not an encouraging sign for the Euro, something that European Central Bank (ECB) seems to agree upon.
Recently-released minutes from the ECB show that policymakers are concerned over the current exchange rate, a topic they continue to show deep interest in. These recent minutes also reveal that the ECB stands firmly behind its decision to extend and increase its loose policy accommodations up through 2022.
Going forward, coronavirus cases continue to be a concern for Euro investors as more member states of the EU continue to move forward with increased pandemic measures. Holland recently announced it would extend its lockdown measures - a move that Germany is expected to mirror after recording a new record number of deaths from covid. It’s important to remember that Germany is the EU’s largest economy, so watching how they respond to the recent surge in coronavirus will be a vital bellwether as we advance.
As always, thanks so much for reading today’s edition of Overbit Insights.