Analyses

DeFi Craze Does Not Stop, CBDCs Around the Corner – Price Analysis, 28 Sep 2020

Blockchain software technology company ConsenSys has partnered with the Hong Kong monetary authority (HKMA) and the Bank of Thailand in the second phase of their joint development of a central bank digital currency (CBDC). According to a recent press release, ConsenSys is researching the implementation of CBDC in a cross-border payment network.

The company noted that they would use a set of corporate Ethereum solutions to test the scalability, security, and compatibility of the digital coin.

Other central banks researching a potential launch of their own digital currencies are the US Federal Reserve System and the European Central Bank (ECB).

On September 21st, during a speech at the Franco-German Assembly, ECB President Christine Lagarde emphasized that the Eurosystem is 'exploring the benefits, risks, and operational challenges of introducing a digital euro.'

A couple of days later, on September 23rd, Loretta Mester, the President of the Federal Reserve Bank of Cleveland, announced that their technology lab is testing a range of distributed ledger platforms to understand the potential benefits and tradeoffs of CBDC implementation.

However, the cryptocurrency community is a bit skeptical towards CBDCs and does not think that digital fiat money will be able to challenge the crypto market. For example, well-known crypto enthusiast Michael Novogratz wrote in his Twitter account that if central banks launch CBDCs, their value will depreciate in the long run, and that is why people will still prefer to buy Bitcoin:

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Source: Twitter

Over the past week, the crypto market was in consolidation. Now, the bulls are trying to retake control over the market and to renew the uptrend. At the time of writing, according to Coin360.com, one Bitcoin costs €9,317.48 (+2.05%), one Ethereum – €307.26 (+1.46%), and one Litecoin – €39.78 (+1.39%):

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Source: Coin360.com (Daily crypto market performance)

Now let us conduct a technical analysis of the price charts of the top cryptocurrencies against the euro.

BTC/EUR

In the 4-hour chart (4H), BTC/EUR formed a local low and has bounced off the uptrend line, thus trying to resume the upward movement: 

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However, as seen in the chart above, right now, Bitcoin is at the resistance line, which the bears will try to defend.

Theoretically, if the bulls defeat the bears and BTC/EUR breaks through the resistance line, the more aggressive traders will open some long positions with a take-profit within the range of the previous local high (approximately at the level of €9,870), and a stop-loss slightly below the last local low (approximately at the level of €8,650).

ETH/EUR

In the weekly time frame (1W), last week ETH/EUR formed a Hammer candlestick:

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According to the technical analysis theory, a Hammer is a price pattern in candlestick charting, indicating that the price decline is potentially over, and an upward price move is forthcoming.

Usually, if traders who use candlestick analysis spot a Hammer candlestick during a price correction, they may open some speculative long trades with a stop-loss slightly below the local low of the candlestick; in the case of ETH/EUR, it would be something slightly below the level of €269.

YELD/USD

The DeFi craze does not stop! YELD, another newly launched DeFi token, was able to record a 6x-increase just in the matter of a few days last week, making another chunk of crypto investors rich. For example, a Twitter user @LitBitFi wrote the following:

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Source: Twitter

According to the info on its website, YELD, the native token of Yeld.Finance, 'rewards token holders and stakers with a solid yield farming [decentralized application] dApp for stablecoins.'

As seen in the chart below, YELD/USD surged from around $30-$35 to approximately $180-$195 from September 21st to September 27th:

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However, we would like to outline that so far, the YELD token has been listed only on the crypto exchange Uniswap (YELD-ETH). No other exchange platform (both among the centralized and decentralized ones) supports YELD. That is why we are a bit skeptical towards the token, and we doubt the sustainability of its price growth in the near future.

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The analysis is purely informational and does not constitute investment, financial, trading, or any other sort of advice and you should not treat any of Bitvalex's content as such. Bitvalex does not recommend that any cryptocurrency should be bought, sold, or held by you. You are solely responsible to conduct your own due diligence and consult an advisor before making any investment decisions.


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