- Bitcoin looks to perform test of USD 7,000 today in European trading time
- The central bank of Netherlands says it is ready to lead an effort for a digital euro
- With Ethereum 2.0 due to arrive in several months, analysts predict a major bull run for ETH
After refusing to give up more ground since Monday’s huge crash for crude oil markets, Bitcoin is right now showing some signs of recovery as it climbs back to test USD 7,000 resistance levels, trading at a daily high of USD 6,972 at 9:00 am London time (UTC 10:00 am, CoinDesk).
With bullish news for blockchain coming all week on the back of trials for a Chinese version of central bank digital currency (CBDC) being confirmed, now the European Union looks set to add more heat to the digital currency race. And the Dutch central bank has now said it is willing to take a starring role, with a willingness to be a testing ground for an EU CBDC.
In a comprehensive report published yesterday, De Nederlandsche Bank (DNB), outlined its eagerness to do two types of digital currency, one that it would oversee, as well as one to be used across the Eurozone.
Talks surrounding a digital Euro have so far been around lowering costs and time frames for cross-border payments for member states, and the Netherlands says that conditions in the country are ripe for such a test. It also said the Libra, the crypto project of Facebook, would pose a threat to monetary staility and admitted this was “the reason why the DNB and other central banks are now considering issuing their own digital currency”.
The Dutch bank says that the patterns of money use in the country makes it suitable for consideration, as paper money and physical coins are seeing less and less use, with almost two thirds of all payments made there taking place in a digital form.
In developing a CBDC, the DNB asks if it is the needs of companies and citizens that should decide the design of the new money, noting how the current global pandemic crisis is pushing people to avoid the use of physical cash. It read:
“Many stores now ask clients specifically not to pay in cash, which effectively means that only private money is accepted.”
But crypto is certainly not going to wait for CBDCs to come out, and with the likes of Bitcoin already pushing ahead with upgrades and second-layer networks, we now also see the new iteration of Ethereum just on the horizon, with the recent launch of an Ethereum 2.0 testnet suggesting that the full version could be with us in a few months and, along with that, could come a major bull run to wildly boost the fortunes of Ether (ETH).
MetaCartel Ventures DAO partner Adam Cochran, who is also anonymous browser DuckDuckGo’s strategy developer, outlines some key reasons in a blog post that he believes would prove ETH 2.0 to be the “largest economic shift in society“.
One of the fundamentals of ETH 2.0 is that it will become a Proof-of-Stake network, which will require large amounts of Ether to be stakes to secure the network. Cochran believes that this will drive a supply shock in ETH, saying that even a dependable staking rewards of 3 to 5% will be very attractive to large investors, especially since up to 30% of ETH could be locked up in staking. Meanwhile a forthcoming burn mechanism should also contribute to its scarcity factor, further driving up demand and, therefore, price.
The analyst further says that all these factors will trigger a fear of missing out (FOMO) among retail investors who don’t really care about technicals but want to get in before it explodes. He even suggests that FOMO today would result in bigger price increases as it is far easier to buy crypto today than it was in 2017. He explains:
“With no stop-gap this time around, that means these users can all FOMO at the same time. All it takes is one crazy MSNBC headline about Ethereum growth to remind them about their Coinbase account, and the retail investors create a flurry.”
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