● United Kingdom, EU Finally Reach Brexit Agreement
● Potential 2nd Strain of COVID Dampens Mood on the Market
● Bitcoin is Still the Outlier; Pushing Past $26k
Thanks so much for joining today’s edition of Overbit.com’s Insights, where we take a peek at some of the emergent trends and how they influence today’s markets. Our first story of today is one that’s been rife with speculation, one that we’ve commented on extensively over the past few months.
After years of stalemates and negotiations, the United Kingdom and the European Union have finally reached an agreement on the so-called ‘Brexit’ Deal, which will allow the UK to continue to trade with the European Union even after they voted to exit the union back in June 2016. This deal has been at the forefront of many investors’ minds. Some believed the economic uncertainty brought on by the lack of an agreement has dragged down the United Kingdom economy, specifically the Great British Pound (GBP).
It’s impossible to understate the significance of this deal, something that both sides have been feverishly negotiating for months and years now. At the time of writing, GBPUSD sits at 1.356, which is just a few pips below its significant resistance of 1.36. Despite the lack of a massive upwards move by the GBPUSD, it seems clear that investors are buoying the British Sterling upwards, whilst it consolidates below significant resistance. This will undoubtedly be one of the major forex pairs to keep a close eye on as we move into 2021 and hopefully out of the pandemic.
Speaking of moving out of the pandemic moves us into our second story of the day - a potential second strain of coronavirus emerging.
According to reports, a new strain of Covid-19 was identified in the UK, which Japanese authorities confirmed when an infected traveller made it from the United Kingdom and into Japan. Recent reports also indicate that Los Angeles County in California, USA has been studying and researching the potential community spread of this rumoured second strain of coronavirus. It seems infection travels fast nowadays, as South Africa had also identified a case of the new strain just a few days ago.
This news has undoubtedly dampened the market mood, one that was soaring just days ago on the back of news like the US finally approving a stimulus package, as well as international vaccine rollouts. Taking a look at the different market sectors, it seems clear that most assets are holding steady, if not declining slightly, against the dollar, as more investors rush back out of risky markets and into the safe-haven dollar.
While almost all markets tread water against the dollar, one asset stands in a class of its own - Bitcoin.
In what seems to be a near-daily occurrence at this point, BTCUSD has breached yet another all-time-high, hitting as high as $26,828 on Saturday, 26 December - indeed a welcome belated Christmas present for many traders and investors.
Although 2020 has been dominated by Bitcoin (and other cryptocurrencies’ rise), this year-end rally seems especially significant. First of all, Bitcoin is reaching all-time highs with little to no fanfare. This indicates we could be a far-way off from 2017, back when many pointed to retail mania as to why Bitcoin was soaring.
What seems more important, though, is Bitcoin’s performance versus the dollar. Until noted otherwise, the US dollar will continue to be the global economic bellwether, with almost every major asset traded against it. As long as Bitcoin continues to move against the US dollar and the US dollar continues to look weak, those who find themselves in the cryptocurrency community could be looking at a very strong 2021.
As always, thank you again for reading this week’s edition of Overbit Insights, where we try and highlight some of the more prominent trends going into the week.