Market Wrap: Bitcoin Rises Despite Geopolitical Tensions

Bitcoin (BTC) and other cryptocurrencies traded higher on Monday, although some analysts remain cautious about geopolitical risks.

Talks between Ukrainian and Russian negotiators could continue over the next few days, although some officials said so far no deal on a cease-fire has been reached, according to the Wall Street Journal

Meanwhile, the U.S. and several European nations have imposed more sanctions on Russia. For example, on Monday, the U.S. Treasury Department prohibited transactions with the Central Bank of Russia and placed sanctions on a key Russian sovereign wealth fund.

In crypto markets, trading volumes between the Russian ruble and bitcoin increased to a nine-month high, according to data tracked by Kaiko. The rise in ruble-denominated bitcoin volume prompted a backlash from one Ukrainian official.

"I'm asking all major crypto exchanges to block addresses of Russian users," Mykhailo Fedorov, vice prime minister of Ukraine and minister of the country's digital transformation, tweeted on Sunday. "It's crucial to freeze not only the addresses linked to Russian and Belarusian politicians, but also to sabotage ordinary users."

Bitcoin's trading volume across major exchanges has declined after the Feb. 24 spike, and selling pressure is starting to fade.

Further, data from Glassnode shows a large portion of BTC held by investors at around the $60,000 price level has found new buyers at the $35,000-$38,000 price range. That could indicate a short-term price low.

Latest prices

●Bitcoin (BTC): $41734, +10.29%

●Ether (ETH): $2827, +8.08%

●S&P 500 daily close: $4374, −0.24%

●Gold: $1911 per troy ounce, +1.29%

●Ten-year Treasury yield daily close: 1.84%

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.

Searching for a low

So, has bitcoin bottomed? Not quite.

Bitcoin has been in a downtrend since its all-time high in November of nearly $69,000, well before the Russia-Ukraine conflict. That means other factors such as global monetary tightening, regulatory uncertainty and lower crypto demand from China have weighed on prices.

Still, cyclical downturns in bitcoin eventually phase out given the cryptocurrency's long-term uptrend.

On average, the S&P 500 takes about 47 days to recover from geopolitical-driven sell-offs, according to data from Swissblock Technologies, a crypto analytics firm. Other studies show that equities continued to advance in three to six months after geopolitical-driven sell-offs. BTC could follow a similar recovery pattern given its rising correlation with the S&P 500.

The chart below shows bitcoin's market-value-to-realized value ratio (MVRV), standardized to show extreme upside and downside moves. Simply put, the ratio provides an estimate of bitcoin's deviation from "fair value."

The MVRV entered overvalued territory at around BTC's November all-time price high, but wasn't as extreme relative to the 2018 peak. That suggests the current down cycle won't be as severe as the previous bear market's 80% peak-to-trough decline.

Still, geopolitical events are highly uncertain, and the MVRV hasn't reached undervalued territory. That could point to additional price volatility over the short term.

Altcoin roundup

• Crypto funds saw minor outflows in altcoins: Solana-focused digital asset funds lost $2.6 million and litecoin-focused funds lost $0.5 million last week, marking two biggest losers in crypto funds. Tezos was the only altcoin investment product to see inflows, as it netted an inflow of $4.4 million. Read more here.

• AMC Theatres will accept Doge and Shiba Inu via BitPay: AMC Theatres customers next month will be able to pay with meme coins dogecoin (DOGE) and shiba inu (SHIB) using crypto payments provider BitPay. “BitPay will be live for AMC online payments on our website by March 19, and live on our mobile apps by April 16, possibly a few days earlier,” tweeted AMC CEO Adam Aron. Read more here.

• Leading interoperability platform Multichain now supports Fuse networks: Multichain (formerly Anyswap) has enabled support for the Fuse Network blockchain. The supported tokens include FUSE, WETH, USDC and BIFI. One of the core ideas animating the Fuse project is the commitment to interoperability. The project believes that in the future, no single blockchain will be dominant and that various blockchains will complement each other to enable users to get the most out of the crypto sector. Read more here.

Relevant news

• US Treasury Prohibits Transactions With Russia's Central Bank

• Ukraine Government Is Using Crypto Aid to Purchase Critical Supplies

• KPMG Canada Follows Bitcoin Buy With Purchase of World of Women NFT

• Intel's Second-Gen Miner's Efficiency Second Only to That of Bitmain's S19 XP: Griid

• Chainlink Adds Bahrain Telco to Roster of Big-Name Node Operators

Other markets

Digital assets in the CoinDesk 20 ended the day higher.

Largest gainers:

Largest losers:

There are no losers in CoinDesk 20 today.

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.