Hello and welcome to another edition of Overbit News. In last week’s edition of Overbit News, the cryptocurrency market was sliding downwards with more than a billion lost in a day, as the US dollar was bouncing significantly off multi-year lows.
To be specific, we wrote, “For now, though, it appears the US Dollar Index (DXY) is bouncing with some room to make a run to the upside before a critical resistance level,”. At this time, it seems as if the dollar has done just that. With Biden’s inauguration set for Wednesday, 20 January, the Dollar Index (DXY) is consolidating right below the significant resistance of 91.00.
Though many analysts call for a weak, bearish dollar under a Biden presidency, it still seems as if the currency markets are holding their breath for Inauguration Day.
This consolidation of the dollar has obviously weighed on markets across the board. Equities have edged up slightly in recent weeks, though still without significant action given the dollar’s ranging. On the other hand, commodities like gold are sliding downward, with the Gold bullion at 1.5-month lows. Oil prices dropped as well on the back of a resilient dollar.
In any event, it seems clear the market is pricing in a large amount of uncertainty given all the unknowns regarding a new presidency, covid relief, and the potential for an economic bounce back in 2021.
As we’ve covered, though, the effects of the US dollar’s price action aren’t constrained to traditional markets, and it certainly spills over into the emerging sector of cryptocurrency.
Mirroring the dollar’s performance, the top leaders of the cryptocurrency space Bitcoin and Ethereum have consolidated, albeit in rather large ranges, for almost ten days now; Bitcoin between $42,000 and $30,000 and Ethereum between $1350 and $900. Regardless of the extensive ranges, these past two weeks mark a considerable shift from the weeks and months past where both assets shot up hundreds and thousands of percentage points.
Although the two crypto leaders slowed down in recent days, the market as a whole did anything but slow down. Money flowed downwards from Bitcoin and Ethereum and into the more speculative alternative cryptocurrencies, also known as ‘altcoins’.
One sector that’s exploded in particular is the DeFi market, which aims to bring permissionless technology to the finance world.
Some of the top projects in the DeFi world are making considerable gains this week. Some of the more notable ones include 7d increases of $UNI posting 77.12%, $COMP 10.09%, and $YFI 24.50%. It’s easy to see that DeFi is here to stay and that the story of DeFi is still being written.
Going forward, make sure to watch out for volatility in the markets. The dollar, as well as Bitcoin and Ethereum, are all consolidating at large turning points. One would expect large volatility from all three sometime soon, which is sure to affect most markets.
Thanks again for reading Overbit News, where we cover the top market news, globally every week.