● After PayPal adds cryptocurrency, Bitcoin flies to the highest since July 2019
● The US Dollar Index continues to tumble
Welcome again to today’s edition of Overbit Weekly Roundup. We’re pretty sure what everyone would like to be covered first today, so let’s jump right in.
On Wednesday, 21 October, Bitcoin spiked nearly 8% to $13,250 - the highest BTCUSD has been in over a year, dating back to July 2019. As there always seems to be with a Bitcoin move of this stature, this pump was accompanied by quite a large news release. PayPal, one of the world’s largest payment processors, announced that users can now buy and hold crypto and soon sell cryptocurrency in early 2021. The offering is quite limited initially, providing users custodial wallets, as well as limiting assets to Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. However, this is comparable to how Square and its CashApp cryptocurrency service first launched, so we imagine the PayPal and cryptocurrency relationship will evolve significantly from here.
Nevertheless, it’s hard to understate how big of a move this is. PayPal reportedly has 346 million active customers and processed nearly $222 billion in payments during Q2 of 2020 alone. On top of that, PayPal has around 26 million merchants who use their service for payment processing. As the billionaire investor and avid Bitcoin fanatic Michael Novogratz said, this is “the biggest news of the year in crypto”. As we have continually seen and written about, the dominant theme continues to be the corporate adoption of blockchain technology. With every passing day, it seems another billion-dollar entity throws their hat in the ring. At this point, the next Bitcoin all-time-high appears to be only a matter of when, and not if.
Speaking of recurring themes we’ve covered at lengths brings us into our last story of the day. On the same day as this Bitcoin pump, we saw the US Dollar index continue its nearly month-long tumble. Looking at the chart, DXY remains unable to gather upside traction near 92.60. All of the uncertainty in the global economic environment, especially in the United States itself, seems to keep putting pressure on the US Dollar. It seems the primary concern is in regards to the United States’ economic recovery, with the FOMC’s Lael Brainard saying that US recovery remains uncertain and uneven. That being said, lawmakers and policymakers are desperate to reach some sort of consensus on stimulus negotiations. With the presidential election just a few weeks away, though, it would be unwise for traders and investors to place their bets on the US reaching a massive, bipartisan agreement in such a short timeframe, especially given the current polarization in America.
At the end of the day, the big takeaway from this week is that the inverse correlation between the US Dollar and Bitcoin continues to ring true. We understand how much we’ve written on this topic, but once again it’s impossible to understate how important this trend is (especially for a cryptocurrency trader or investor). The global economic climate is always changing and growing in terms of size and complexity, which is most of the reason playing the markets is so hard. Finding such a dominant and recurring trend like the current correlation between Bitcoin and the dollar is a trader’s dream, and so we will continue to cover it with the significance it holds.
Thanks for reading, and as always, at Overbit.com, we will continue to bring you the most important stories of the week.