Forex Analysis & Reviews: 29.03.2022 - The new digital US dollar...

29.03.2022 01:22 PM

The new digital US dollar and its differences from CBDC

Bitcoin and ether rates have come close to their 200-day moving averages. This also indicates that trading instruments are approaching very large levels of resistance, which institutional players pay attention to. A breakout of averages may become a new wave of a large bull market, which we managed to forget about in November last year. But before we talk about the technical picture, let's quickly run through the news that a group of American lawmakers considers the US Treasury Department to be a suitable state organization for creating a digital dollar. So far, this role is being performed by the Federal Reserve System, but according to the new bill that has been submitted for discussion, this role is more suitable for the Ministry of Finance.

Whether this will be evidence of the redistribution of rights and influence of one institution over another is unclear, but the fact that legislators are making such a proposal is in itself a kind of nonsense. Stephen Lynch (Massachusetts), Jesus Chuy Garcia (Illinois), Ayanna Pressley (Massachusetts), and Rashida Tlaib (Michigan) presented the ECASH "Electronic Currency Law", where the Ministry of Finance was instructed to develop and issue an electronic version of the US dollar to preserve confidentiality and anonymity in transactions. The electronic dollar, as defined in the bill, will be a bearer instrument that people will be able to keep on their phones or a card. The system will be based on tokens, not accounts, which means that if someone loses their phone or card, they will lose funds. In other words, it's like losing a wallet with dollar bills.

The electronic dollar will be considered legal tender and will be functionally identical to the physical US dollar.

We are not talking about CBDC, since the proposed digital analog of the physical dollar has a completely different structure. Rohan Gray, a representative of Willamette University, who was a consultant on the new bill, said that the bill is intended to create a real digital analog of the US dollar. "We propose to have a real bearer instrument, similar to cash, a token-based system that has neither a centralized nor a distributed registry. The digital dollar will use secure hardware software and be issued by the Ministry of Finance," he said. Given the meaning invested in the new development, it will support completely anonymous transactions.

The main difference between CBDC and the stablecoins present on the market is the absence of a registry and, in general, there is no need to use blockchain to verify each transaction, so any transaction can be linked to the sender and recipient. According to the proposal, users will not be subject to stricter rules than those who try to use cash. They will need to purchase electronic money through a bank account, or any other available method, after which they will be able to do whatever they want. The system can serve people who cannot have bank accounts due to minimum balance requirements, or those who do not trust banks because banks can charge a commission or freeze funds.

Whether such a digital dollar will be a haven for those who do not trust the financial system - time will tell. But it is unlikely that the US will abandon the development of CBDC, so nothing has been determined in this direction yet.

As for the technical picture of bitcoin

Bitcoin has hit the $ 48,550 mark, where the 200-day moving average is just passing, limiting the upward potential of the trading instrument. The breakdown and active purchases above can play at the level of investors' greed, which will lead to reaching the next monthly highs in the areas of $ 41,800 and $ 55,150. The fact that bitcoin feels pretty great in the current conditions proves the interest in it, keeping its bullish potential in the long run. A breakout of the 200-day moving average will be a real signal of the continuation of the long-term bull market. In the case of a decrease in the trading instrument, only a breakdown of $ 45,700 will fail the trading instrument below, to a minimum of $ 43,100, and there it is at hand to $ 40,400.

As for the technical picture of the ether

The focus remains on the $ 3,470 resistance, where the 200-day moving average runs. Only the consolidation above will continue the upward trend for the trading instrument. The breakdown of $ 3,470 will serve as a new impulse to reach the levels of $ 3,682 and $ 3,887. In the event of a return of pressure on ETH, purchases in the area of large support of $ 3,270 are not excluded. A break in this range will be a reason to go to the lows of $ 3,050 and $ 2,830, where the major players will again begin to actively act.

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