In the commodity market, oil prices have tumbled over 3% as investors are worried that the new COVID strain found in the UK would force more lockdown and thus hit demand for crude. Elsewhere, gold is leveraging its safe-haven asset status and exceeded the $1,900 mark for the first time since early November. Futures on the precious metal are up about 1%.
In FX, the US dollar is increasing on the same demand for safe-havens. The USD Index is up 0.52% to 90.425. EUR/USD is down 0.58% to 1.2184. The sterling has tumbled about 1.50% against the USD and over 0.80% against the euro amid the fresh emergency lockdown.
Meanwhile, investors are watching the impressive rally of the cryptocurrency market, as Bitcoin has recently updated the record high for the first time since December 2017 to consolidate above $20,000. The largest cryptocurrency by market cap is now trading at $24,000, gaining over 220% so far this year. Ethereum has surged over 400% YTD, rallying as the second-largest cryptocurrency is adopting a major update called Ethereum 2.0.
While many institutional investors are betting on Bitcoin and other digital currencies for their capabilities to act as a store of value, especially during the pandemic, another key aspect attracting enthusiasts is the technology underpinning cryptocurrencies – blockchain. Also called distributed ledger technology (DLT), it can be used for any use case by providing private, transparent, reliable, effective and efficient day-to-day solutions at a cheaper cost. Blockchain is expected to transform many industries, starting with finance. The COVID pandemic has forced a rapid adoption of digital solutions, which favors blockchain – a technology that encourages automation thanks to the smart contract feature. The technology is already implemented at various levels in many sectors, but more adoption is expected next year, as more solutions will be created in banking & payments, cybersecurity, supply chain, insurance, Tech & IoT, transportation, legal, and real estate.
Besides the corporate world, many governments and state-related institutions are also implementing blockchain. Major central bankers are also pondering blockchain-based digital currencies, known as CBDCs (central bank digital currency). The European Central Bank, along with the Bank of England and central banks from Japan, Switzerland, Sweden, created in January a think tank to test and potentially implement CBDC.
China has already trialed a digital yuan, though it doesn’t rely on a blockchain infrastructure. Nevertheless, Beijing has praised the technology.
All in all, the blockchain space comes with many opportunities for investors, as the trend will remain highly attractive.
By Strategy Desk