Weekly Review
The Bitcoin price has increased by 10% over the past week, gradually restoring investor confidence. Looking ahead, the future is bright.
Bitcoin’s spot trading volume spiked during the crash, with traders fleeing to cash. Futures volume also increased, especially as liquidations followed one another rapidly increasing sell pressure.
Now, while global stock and commodity markets have slumped, bitcoin trading volume is up by 170% as a possible tool to hedge against the COVID-19’s negative impacts, or at least to capitalize on the commotion around Bitcoin.
Trading volumes have slight decreased with tightening Bollinger Bands. Bitcoin’s price has continued to rise toward the upper band, the 14 days average line has overtaken the 21 days’, and USD$7,000 price will be the next supporting point.
Cryptocurrency in relation to other markets
We selected some alternative investment markets to determine to what extent they correlate with the crypto markets. As we can tell, there was no significant correlation between BTC and other alternative investments. Correlation between BTC and stock market volatility is low this week.
Cryptocurrency Market Panic Index
Instead of using social media panic factors that are difficult to quantify, we calculate the BTC market panic index completely based on volatility. Based on the CBOE calculation method for the S&P VIX index, we use the near- and next-term put and call BTC options to calculate the VIX trend chart (The lower the VIX, the lower the market panic). As shown on both graphs, the correlation between BTC and ETH panic indexes is extremely low this week.
Digital currency prices (2020-04-06 UTC 12:00)
News of the week
BIS Report: COVID-19 Pandemic Could Spur CBDC and Digital Payments Adoption
In a report issued on April 3, 2020, the Bank of International Settlements (BIS) opined that it could soon ramp up its operations to make way for central bank digital currencies (CBDC) and digital payments amid the COVID-19 pandemic.
COVID-19 Could Spur CBDC Development
Reacting to fears of transmission of the COVID-19 virus via currency notes and coins, the BIS recently published a report titled “Covid-19, cash, and the future of payments” stating that the pandemic could spur the growth and adoption of CBDCs across the globe.
The report reads in part:
“In the context of the current crisis, CBDC would in particular have to be designed allowing for access options for the unbanked and (contact-free) technical interfaces suitable for the whole population.6 The pandemic may hence put calls for CBDCs into sharper focus, highlighting the value of having access to diverse means of payments, and the need for any means of payments to be resilient against a broad range of threats.”
According to the report, there are concerns among people that banknotes and coins could be some of the most active carriers of the COVID-19 virus. A large number of media houses have approached various financial and banking institutions the world over to learn in detail about the basis for such concerns.
Banks Leaving Nothing to Chance
Notably, to date, there are no known cases of COVID-19 transmission via banknotes or coins. Nevertheless, central banks around the world are taking active measures to mitigate the risks associated with the transmission of the virus via physical currency.
For instance, the People’s Bank of China in February 2020 began sterilizing banknotes in regions affected by the virus. Similarly, in March, the U.S. Federal Reserve noted that it was quarantining bills arriving from Asia prior to recirculation.
