Leading up to this week we had already gotten to see some of the consequences of Western sanctions on Russia, but we were not expecting such a rapid de-coupling from crypto’s correlation to US Equities.
Monday was a statement day for Bitcoin (BTC) +14.5% and the rest of the cryptocurrency market, with the overall crypto market cap increasing by $200 billion between February 28 and March 1.
The most obvious narrative in global media regarding cryptocurrencies is that Russia will utilize decentralized digital assets in order to sustain international business with their few remaining allies.
With the Russian Ruble tanking in value, Bitcoin now officially has a higher market cap than Russia’s currency. Decentralized blockchain-based cryptocurrencies are now one of the few viable options left for Russia and Russian citizens to use to transact with.
The Ukrainian government even went so far as to request for global cryptocurrency exchanges such as Kraken and Binance to ban Russian users, a plea that was obviously rejected by the exchanges as they are aiming to remain neutral in the face of conflict.
We did however see more acts of crypto-philanthropy directed towards Ukraine. The Ukrainian government had already set up BTC, ETH, and USDT wallets for donations last week, and have now also created a Polkadot (DOT) wallet as well. Upon opening the Ukrainian DOT wallet, Polkadot’s founder Gavin Wood made a personal donation of $5.8 million of the DOT currency.
What was most exciting for crypto traders was seeing Bitcoin re-establish support above its key 50-day moving average.
BTC improved to a Recovery phase on price, as well as a Bullish phase on the 10/50 RealMotion indicator. After Monday’s move BTC got a bit overbought on both price and RealMotion and proceeded to retreat to the $42,500 area by Thursday morning.
At the moment, Bitcoin has very clear resistance at $44,440 and would need to close above $45,500 in order to test February’s trading range high. Downside support is currently at $41,500.
We’re watching to see if the longer-term 50/200 RM can make higher highs after improving to a Recovery phase, which would be a definitive signal of a positive momentum change.
Russia’s sudden adoption of cryptocurrencies combined with the onslaught of Western economic sanctions were the perfect mixture for a cryptocurrency breakout, but it would be foolish to say that the Eastern-European conflict is the sole reason for the global flight to crypto this week.
There are simply too many participants involved in cryptocurrency markets and blockchain technologies for the industry to go belly up like many antagonists still believe is possible. These participants are from 3 definitive levels: Retail, Institutional, and National.
Retail investors have continually piled into the crypto market over the past 2 years, and that trend looks to continue as long as new and valuable fintech is continued to be built for retail traders such as crypto-banking services.
The next barrier to breach in order to unlock another massive wave of retail adoption is the institutional level, as these are the service providers that will facilitate the transition from traditional to digital for people around the world.
Institutional participants are involved in crypto/blockchain in various ways, most common of which include providing blockchain-based financial services, investment products (ETFs, Trusts, Public Stocks), and even investing their own capital directly into cryptocurrencies.
Institutional participation can range from AMC theaters accepting Dogecoin (DOGE) and Shiba Inu (SHIB) at their brick and mortar locations, all the way to major hedge funds piling into cryptocurrency bets.
Traditional names and institutions join the emerging crypto space every day. In the past two weeks we’ve seen Berkshire Hathaway invest $1 billion in the crypto-friendly brazilian Nubank, while simultaneously reducing positions in Visa and Mastercard.
This week we had another major name announce their sentiment towards cryptocurrencies, with Billionaire investor Bill Miller touting Bitcoin as the best flight-to-safety asset to hold during periods of international unrest. (Source: Finbold)
Miller is quoted as saying,
“If you are a country out there that has a non-reserve currency (there’s about 100 of them) you might think about something else out there that other countries cannot harm us with, that is impervious to inflation or to being manufactured in greater quantities. So I think it’s very bullish for Bitcoin in particular.”
Bill Miller’s sentiment is an interesting debate for world leaders and nation-states to consider moving forward… The inherent decentralized nature of cryptocurrencies prevents them from being controlled by any 1 person or country, which is the likely reason for Russia’s flight-to-crypto amidst sanctions.
We declared last week that cryptocurrencies have officially become political, but the day is nearing where significant world powers will have to start making decisions regarding how they plan to adopt the digital currencies.
Since the invasion of Ukraine began, we have seen the EU debate possible crypto adoption/regulation, as well as Fed Chairman Jerome Powell stating on Wednesday that cryptocurrencies may emerge as global reserve currencies based on the current state of global affairs.
What is consistent across retail, institutional, and national counterparties is that all 3 groups are acknowledging that the crypto industry is going to be heavily involved in global development efforts moving forward.
It is important to acknowledge this, because even if you don’t believe that blockchain technology and cryptocurrencies are the future of finance, it would be naive to not recognize that everyone, everywhere is preparing for a paradigm shift from traditional to digital and from centralized to decentralized.
**If we discussed a cryptocurrency that you would like to trade but isn’t offered on your current crypto exchange, please see coinmarketcap.com in order to view a profile on any tradable cryptocurrency, as well as a list of exchanges that do offer the coin for trading.**
To track our CryptoPulse Quant trading strategy or use our crypto tools and resources, please check everything out here:
CryptoPulse Quant ($)
Daily & Weekly Commentary (free)
Stock Sectors Radar ($)
*Coin Rankings ($)
Resources (free)
“*” Simply click a ‘symbols’ to see an interactive chart
Membership required