Market Wrap: Bitcoin and Altcoins Dip Amid Russia, Ukraine Uncertainty
Cryptocurrencies and stocks declined on Friday as traders reacted to geopolitical risk.
U.S. officials continue to warn Russia could attack Ukraine within the next few days, adding that prospects for averting a war are very dim. Meanwhile, Russia denies any plans to invade Ukraine and described global concerns as "hysteria."
Bitcoin (BTC) was down 2% over the past 24 hours, and briefly dipped below $40,000 for the first time in two weeks. Meanwhile, alternative cryptocurrencies (altcoins) such as ether (ETH) and solana (SOL) declined as much as 4% over the past 24 hours.
"Crypto performance in the last week shows us that there’s very little room for complacency regarding any of the major themes impacting this market," David Duong, head of research at Coinbase Institutional, wrote in a Friday newsletter. "Open conflict could potentially affect bitcoin hashrates, which could exacerbate the knee-jerk market reaction weaker for high-beta risk assets like crypto."
Earlier this month, Coinbase tweeted that it saw a net inflow into stablecoins (a crypto reserve asset) totaling $3.5 billion between November 2021 and January 2022 as market volatility picked up. That signaled a flight to safety among traders on the Coinbase exchange. Still, the company does not expect a repeat of the 2018 bear market.
For now, technicals are mostly bearish for bitcoin. There are initial signs of downside exhaustion on the BTC daily chart, which suggests the pullback could stabilize between the $30,000-$40,000 support zone.
Latest prices
●Bitcoin (BTC): $40093, −2.37%
●Ether (ETH): $2797, −4.16%
●S&P 500 daily close: $4349, −0.71%
●Gold: $1898 per troy ounce, −0.16%
●Ten-year Treasury yield daily close: 1.93%
Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.
The recent decline in the 10-year Treasury yield could be a short-term positive for speculative assets such as equities and cryptocurrencies.
"We remain cyclically bearish on bonds, although yields could soon pause; conditions are becoming technically stretched and U.S. rate expectations have already ratcheted higher," MRB Partners wrote in a research note this week. "However, any pause, like the dip in yields last year, will not mark the end of the cyclical rise in yields."
Bitcoin's correlation with stocks remains elevated over the short term, which means price jumps could be temporary if macroeconomic and geopolitical headwinds continue to linger.
So far this month, bitcoin trading volumes across major spot exchanges remain low relative to prior peaks. An increase in trading activity is expected, especially if sharp price swings occur.
Bitcoin trading volume (CryptoCompare)
Altcoin roundup
- Skale Launches $100M Ecosystem Fund: Skale, a multi-chain Ethereum-scaling system, announced a $100 million ecosystem program to incentivize developers to build on its platform. Launched in 2018, Skale is a decentralized network of blockchains built natively on Ethereum, with a focus on running decentralized applications with speed and low cost. Skale Network's SKALE token is up 45% from its cycle low of $0.10 on Jan. 22. Still, the token is 88% below a peak of $1.20 reached in March 2021. Read more here.
- Hackers behind AscendEX breach move $1.5M ETH to Uniswap: Funds stolen during December’s hack of AscendEX have begun moving to decentralized exchange Uniswap, according to on-chain data first spotted by security research house PeckShield. In December, hackers stole $77 million from AscendEX, mostly in ether, Binance Smart Chain's token and MATIC. Read more here.
- NFT slowdown: "NFT volume has imploded recently, down 75% from the start of the year to around $200 million," Marcus Sotiriou, an analyst at the U.K.-based digital asset broker GlobalBlock, wrote in a Friday email. "Since the mania at the start of the year hype has dropped off significantly, but we have seen this happen many times in the NFT space." Non-fungible token platform tokens such as GALA, RARE and ENJ are down as much as 90% from their all-time highs.
Relevant news
Other markets
Digital assets in the CoinDesk 20 ended the day lower.
There are no gainers in CoinDesk 20 today.
Largest losers:
| Asset | Ticker | Returns | Sector |
|---|---|---|---|
| Polygon | MATIC | −4.7% | Smart Contract Platform |
| Ethereum | ETH | −4.2% | Smart Contract Platform |
| Solana | SOL | −4.0% | Smart Contract Platform |
Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.
DISCLOSURE
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Damanick is a crypto market analyst at CoinDesk where he writes the daily Market Wrap and provides technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also an equity/fixed income portfolio manager and does not invest in digital assets.
