● Bitcoin Sell-off on Bearish Sentiment
● Ethereum Approaches its All Time High
● Bets Against the US Dollar at 10-Year High
As always, thanks for joining us for this week’s edition of Overbit Weekly Round Up, where we aim to give you some of the highlights of the past week in financial markets.
We start off the day with Bitcoin, the world’s leading cryptocurrency. After a massive, multi-month uptrend, it seems BTCUSD has finally cooled off - at least for the meantime. After hitting a local high of $42,000 in the first week of January, Bitcoin has consolidated between that price and $30,000 for the rest of January.
Within this larger consolidation, though, traders saw a 5.6% sell-off on Wednesday, January 20. Many in the industry attributed this downward move to comments made by newly-inaugurated administration in the United States. More specifically, Biden’s expected Treasury Secretary Janet Yellen put a damper on the cryptocurrency market’s mood when she expressed concern for illegal activity on blockchain networks, stating that they were used “mainly for illicit financing”. Yellen went further, saying “I think we really need to examine ways in which we can curtail their use and make sure that anti-money laundering (sic) doesn’t occur through those channels.”
Such a position from an incoming administration presumably sent shockwaves across the whole market. At press time, bitcoin traded at $35,008.58, according to CoinDesk data. This led to a broader sell-off in the cryptocurrency market as a whole, including Stellar, XRP and Chainlink.
Despite the weak showing across the board for cryptocurrencies on Inauguration Day, there was an outlier to the market - the number two cryptocurrency, Ethereum. The day before Wednesday, Ethereum rallied as much as 17% before topping out right above $1,400. That puts ETHUSD just a few dollars away from its $1,448 record hit at the start of 2018.
While it’s important to be careful at such a major resistance like an all-time high, it’s also important to remember how vastly different conditions are now vs the 2018 top. As one market analyst put it, “The Ethereum technology has undergone a tremendous amount of development since reaching its 2017 high,” said Nicholas Pelecanos, head of trading at crypto firm NEM to CNBC.
Closing out this week’s Weekly Round Up with the US Dollar. As the new administration sets to start in the US, bets against the US Dollar rise to their highest levels in almost a decade. According to Reuters’ report this week, investors, including hedge funds and other assets managers, have increased their net short position to $34.04 Billion. This amount has been the highest levels of shorts against the US Dollar since 2011.
The newest Treasury Secretary nominee Janet Yellen plans to lead a “hands-off” approach to exchange rates, as reported by the Wall Street Journal, meaning that the Treasury could be ok with further declines for the US Dollar.
Overbit will continue to provide the latest analyses of the world’s markets every week and will be sure to inform you on the macro trends of forex and cryptocurrency markets. We thank you again for reading and be sure to check out the ever-evolving trading platform at Overbit.com.