Hello as always, and welcome to today’s edition of Overbit News. It appears this week has started much as the last, with a red Monday to kick off the week. However, the red day on 22 February went down in a much more dramatic fashion, with Bitcoin tanking 17% intraday, from $58,000 to $47,000.
Such a move sent the entire market tanking, with ETHUSD crashing from just above $2,000 to $1,500 - a 25% move, with most altcoins following suit. As is typical in markets, the newsmakers had no shortage of reasons for what caused such a massive selloff in the cryptocurrency markets.
News outlets across America reported on Monday, 22 February, about Treasury Secretary Janet Yellen issuing yet another warning about cryptocurrencies, arguing that Bitcoin is “an extremely inefficient” way of conducting financial business. Yellen talked with a litany of typical Bitcoin criticisms: volatility, energy usage, illicit activity, and more. Although none of these criticisms is inherently original, it is certainly interesting, to say the least, to see the US Treasury Secretary so often talk about and criticize cryptocurrency markets. This will surely be a trend to watch going forward, and we’ll do our best to keep you up-to-speed.
As cryptocurrency markets cool off from their nearly year-long run at this point, we take a look at the macro worldview. The world is almost a year off from the start of the pandemic, and cases are plummeting across the globe. Despite this good news, central governments worldwide continue to set their sights on increased fiscal stimulus to ‘round the curb’, so to speak, on the last leg of coronavirus.
Take the United States, for example, where Janet Yellen chastised Bitcoin and cryptocurrencies on the same day. She also reiterated her call for a ‘large stimulus package’, according to Yahoo News. This would fall in line with President Biden and many of the Democrats’ strategy from the beginning, which was to have a much larger relief package with increased direct payments.
Across the pond, things are much the same for the United Kingdom. As the UK is set to begin loosening its coronavirus restrictions on society, its chief financial officers target even more in stimulus packages to get the country back on its feet. Just a few days ago, the Citi financial group that the UK chief finance officer, Rishi Sunak, can “Go Big” on stimulus funding in the country’s upcoming budget, with Bloomberg even drawing direct comparisons to the United States’ approach, saying that the UK can follow Joe Biden’s lead.
It seems many of the world’s financial minds are on the same page, with the Financial Times issuing an opinion piece from its editorial board entitled “Europe should ‘go big’ on the fiscal policy too”, obviously drawing from the Bloomberg mentioned above article. The editors once again drew upon comparisons to the United States, arguing that the Eurozone needs to take bold action as well, if not even more so, given its worse economic environment.
Whilst it’s impossible to say what the direct impacts of continued stimulus packages from significant world governments will have, one thing is for sure - an exodus of investors has been moving to alternative markets and assets that are resilient against such economic inflation, with many of the largest investors arriving at Bitcoin. As long as government inflation continues, we expect that trend to stay intact.
Thanks so much for reading today’s edition of Overbit News and be sure to visit Overbit.com for all your trading needs.