Crypto Markets Remain A Prisoner Of War And Worry

Crypto markets remained wary as financial markets across the globe continued to be swayed by developments following last week’s Russian invasion of Ukraine. Market movements now also factor in the impact of the retaliatory sanctions and restrictions imposed on Russia post the invasion.

Crypto market capitalization is at $1.72 trillion versus the low of $1.56 trillion touched after the Russian invasion. On an overnight basis, the market capitalization has fallen by more than 1.5 percent. Market cap ranged between $1.8 trillion and $1.69 trillion in the past 24 hours.

Gold, which is often compared with cryptocurrencies for it’s safe-haven appeal is currently trading at $1918.45 versus $1887.60 on Friday, $1926.30 on Thursday and $1910.40 on Wednesday, the day before the invasion.

Asian bourses finished mixed, while European and American bourses are in negative territory.

The U.S Dollar Index is at 96.86 currently, versus 96.61 on Friday, 97.14 on Thursday and 96.19 on Wednesday. Dollar, which inversely influences crypto prices, has been gaining since the rapid escalation in geopolitical tensions. The Russian Ruble dropped heavily as investors weighed in the impact of the sanctions against Russia. The USD/Russian Ruble rate ranged between 93.0028 and 117.8170 in Monday’s trade.

Brent Oil Futures is at $97.63 versus $97.93 on Friday, $99.08 on Thursday and $96.84 on Wednesday. Brent had soared to $105.79 on Thursday fueling fears of another fuel-led inflationary flare-up. Russia is the second largest natural gas producer in the world and disruption in supply lines is also feared to push energy prices higher, worsening the inflationary scenario further.

The Federal Reserve’s interest rate liftoff in March, which was expected to act as a strong ammunition in the fight against inflation, could now be a dilemma between the conflicting pressures of managing sticky inflation and maintaining financial stability, amidst a volatile geopolitical scenario. Any easing in the aggressive monetary policy stance adopted by the Fed would be greeted with jubilation by the crypto world.

Market leader Bitcoin is currently trading at $38,850.42, around 12 percent above the 30-day low of $34,459.22, 17 percent above the 90-day low of $33,184.06 and 34-percent above the 52-week low of $28,893.62.

At current prices, only 8th ranked Solana (SOL), 22nd ranked Uniswap (UNI) and 25th ranked Bitcoin Cash (BCH) are among the top-25 cryptos trading in overnight positive territory.

The war in eastern Europe appears to have triggered an increased use of cryptocurrencies as a mode of payment in the war zone. Crypto crowdfunding too appears to have increased in popularity. At the same time, the likelihood of cryptocurrencies being used to bypass the sanctions regime has increased the clamor for the regulation of cryptocurrencies.

It remains to be seen how the events in the war zone and the world’s response thereto would bode for the future of cryptocurrencies. Would the essence of cryptocurrencies like the decentralized nature, the scope for anonymity, borderless ambit, etc. be compromised as war zone embraces crypto? We will soon know.

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