Will The ECB Issue A Digital Currency Soon?
ECB President Lagarde – Bullish on Retail CBDCs
By Bogdan Giulvezan
Speaking Thursday at the Deutsche Bundesbank online conference on banking and payments in the digital world, ECB President Christine Lagarde said that “Introducing a digital euro would allow the Eurosystem to be at the cutting edge of innovation” but also mentioned that “Europe has fallen behind in this competition”.
Central Bank Digital Currency (CBDC) can be a solution to allow banks to access central bank funds more efficiently and as Lagarde put it “digital wholesale money is not new”; however, making CBDCs available to retail customers would be very innovative and would be accessible to a large audience. According to studies, the pandemic acted as a catalyst for digital payments, with more and more people preferring to use their cards (or other digital means) as opposed to cash. This trend will probably continue even when the pandemic is over, making the prospect of a digital Euro more appealing now than ever.
According to ECB executive board member Yves Mersch, the ECB set up a team in 2020 for analyzing how a retail CBDC would fare. The findings are due to be released in the coming weeks, as confirmed Thursday by ECB President Lagarde.
If the European Central Bank does indeed decide to release a digital version of the Euro, available to the large public, it would be a step towards other Central Banks doing the same and will greatly boost the mass adoption of cryptocurrencies in general.
The Technical Scene
The effects of Lagarde’s speech are not yet reflected on the Bitcoin charts, but we may see some movement once the taskforce’s findings are released to the public. For now, Bitcoin is trading in a tight range between $9,800 and $10,500 but every time it dips below $10K, long positions increase, making it bounce above said price, showing that people are interested to buy what they consider a cheap BTC (below $10K). However, buying pressure quickly subsides as soon as price approaches $10,500, showing that at least for the moment, price is likely to stay in this range.
The recent price action also shows that the technical and psychological level around $10,000 is holding but the technical indicators are showing mixed signals: the Stochastic (Daily charts) is oversold and is barely crossing upwards but the MACD is still going south and moving below its zero level.
To sum it up, price has reached a major level and there are no clear signs to support an accurate prediction. A break of the level would likely send price into the next support located at $9,000, while a bounce would increase the chances of another attempt to break the high at $12,000. Caution is recommended until a clear move takes place.
