Financial Associated Press: Two "mirrors" of the dollar: the euro and cryptocurrencies

The recent movement of the U.S. dollar index has caused market divergence. Since April this year, the U.S. dollar index has turned from up to down: As of April 16, the U.S. dollar index closed at 91.5, down about 2% from 93.3 on March 30. Such a trend has once again intensified the market's divergence on the future trend of the dollar: on the one hand, the Fed's monetary policy remains loose and recent signs of "catching up" vaccinations in Europe have indeed provided the basis for a weaker dollar; The promotion of vaccines is leading, and the U.S. economy is expected to achieve "always unique", especially the recently released economic data are good, the market's confidence in the US dollar and US dollar assets should be sufficient. Since mid-March, the proportion of non-commercial long positions in the US dollar index has jumped to the level of the first half of 2020.

Security Team: Addresses starting with 0x8fd5 withdrew 5,000 WBTC from MakerDAO: Jinse Finance reported that according to PeckShieldAlert data, giant whale addresses starting with 0x8fd5 withdrew 5,000 WBTC (approximately $85 million) from MakerDAO. [2022/12/6 21:25:20]

We believe that to observe the trend of the U.S. dollar in the near future and understand the short-term fall of the U.S. dollar, we can focus on observing the two major "currencies" - the euro and cryptocurrencies. They are like two "mirrors" of the US dollar, because their trend is opposite to that of the US dollar index, and they reflect the international economic trend and marginal changes in the market's asset allocation thinking.

The first mirror of the dollar - the euro. The euro accounts for as much as 57.6% of the dollar index. Since April this year, the euro has strengthened significantly, manifested as an increase in the exchange rates of the euro against the dollar and the euro against the pound. The reason is that the gap between the relative performance of the US and European economies (on the expected level) seems to have narrowed recently:

BlockBar to Auction 1970 Japanese Whiskey NFT with Starting Bid of $75,000: Golden Finance reports that BlockBar, the first direct-to-consumer (DTC) luxury wine and spirits NFT marketplace, is auctioning 1970 Japanese Whiskey as an NFT. This unique bottle, a special edition of BlockBar featuring custom label artwork designed by one of Japan's preeminent calligraphers Soun Takeda, will be auctioned on July 12 at 12:00 AM EST, with bidding The price is $75,000. (finbold) [2022/7/13 2:10:26]

First, the improvement of the epidemic situation in Europe is expected to become stronger. Prior to this, vaccination in the euro zone severely "underperformed" the United Kingdom and the United States, and the epidemic rebounded, and market confidence was low. However, since the implementation of the blockade during Easter in Europe, the new crown epidemic has been brought under control, and many countries have recently announced the path of unblocking. The European Union's vaccination has exceeded 100 million doses, and the vaccine coverage rate is around 12%. Recently, the European Commission itself predicts that "herd immunity" may be achieved by mid-July.

The Nervos Foundation launched the Web3 developer support plan to provide peer-to-peer support for developers: Golden Finance News, the Nervos Foundation announced the launch of the Web3 developer support plan Nervos BuildClub, which aims to provide Web3 developers with the resources and peer-to-peer services needed to build dApps. Support, including support from the Nervos Foundation in marketing, technical support, and access to Grant funding. [2022/4/29 2:40:02]

Second, the EU's fiscal stimulus is expected to exert force. The EU plans to start issuing 800 billion euros of bonds under its "Next Generation EU" program in July. On the other hand, in the United States, after the infrastructure plan was released on March 30, the market's attention has shifted, and more attention has been paid to the implementation and impact of Biden's tax increase policy.

AndreCronje issued an article explaining its ve(3,3) DeFi product: On January 6th, Yearn.finance founder Andre Cronje issued an article introducing "ve(3,3)", explaining how the tokens released based on the "potential future" can balance the ecology system participants. The product mechanism is similar to that of Curve. You can lock the product Token to obtain veToken with the right to affect the interest rate of the mining pool. The Token issuance decreases every week and is determined by the number of veTokens. The more veTokens, the less Token issuance. In addition, veToken can be traded as NFT in the secondary market to solve the liquidity problem of locked assets. [2022/1/6 8:30:07]

Third, the ECB has shown more confidence and restraint. European Central Bank officials have recently begun "forward guidance", conveying information about scaling back the PEPP (Pandemic Emergency Relief Program). For example, on April 14, the governor of the Bank of France said that he may withdraw from the PEPP in March 2022, after his colleagues in the Netherlands said that the PEPP may be terminated as early as the third quarter of this year. In contrast, the Federal Reserve (announced to the outside world) still has not started specific discussions on tapering QE. From this point of view, the European Central Bank is either more confident in economic recovery, or more restrained in monetary easing, but these all point to the shift in monetary policy and the appreciation of the euro.

The second mirror of the dollar - cryptocurrencies. The prices of cryptocurrencies represented by Bitcoin have shown a fluctuating upward trend this year, which has aroused heated discussions in the market. Supporters believe that it is more "safe" and is expected to become a currency that can be circulated in the future. From the perspective of asset allocation, its price rise itself means that it (at least in stages) has a certain allocation value. Opponents believe that its speculative elements are mostly, and the previous price increase is related to the flood of liquidity, which may contain "bubbles".

Recently, the market's views on cryptocurrencies represented by Bitcoin have also undergone some marginal changes. In late March, BIS held a seminar on digital currencies. On the whole, the central banks of various countries are cautious about the promotion of digital currencies, and their views on Bitcoin are relatively negative. They believe that Bitcoin has a strong speculative nature and the currency value fluctuates too much. However, the market is still enthusiastic about cryptocurrencies such as Bitcoin: companies represented by Musk have increased the allocation of cryptocurrencies and are trying to develop payment application scenarios for Bitcoin; the Chicago Mercantile Exchange (CME) announced plans to launch mini-bitcoins ( Micro Bitcoin) futures products are expected to further increase its liquidity. Since April, Bitcoin has stabilized above $58,000, and its price volatility has been significantly reduced compared to before. JPMorgan Chase (153.3, 1.13, 0.74%) believes that the normalization of Bitcoin's volatility may help rekindle institutions' interest in Bitcoin's future prospects and encourage institutions to invest in the digital currency market.

The data shows that since the beginning of this year, the trend of the U.S. dollar index and Bitcoin has shown an obvious "seesaw" effect. We believe that the popularity of cryptocurrencies is directly related to the "excess" liquidity of the US dollar. With the growth of the volume of the cryptocurrency market and the further popularization of the audience, its role in absorbing liquidity may become more obvious, which in turn will have a certain impact on the demand and value of the US dollar itself. As a product of this era, whether cryptocurrency can be accepted by the public as an "asset" worthy of allocation in the future remains to be seen. However, its possible impact on anti-inflation assets (such as gold) and safe-haven assets (such as the US dollar) may not be ignored.

Tags：

Filecoin