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Here’s what’s happening this morning:
- Market Moves: Bitcoin extends Monday’s rally even as traditional markets signal caution.
- Featured stories: Analysts cite increased demand from Ukraine and Russia as catalyst behind bitcoin’s bullish move.
And check out the CoinDesk TV show “First Mover,” hosted by Christine Lee, Emily Parker and Lawrence Lewitinn at 9 a.m. U.S. Eastern time. Today’s show will feature guests:
- Greg King, founder and CEO, Osprey Funds
By Omkar Godbole
Bitcoin neared the $45,000 mark, extending Monday’s gain despite risk aversion in traditional markets.
The futures tied to the S&P 500 slipped, the 10-year Treasury yield hit one-month lows and the yield on the 10-year German bund yield returned to negative territory after a month.
In currency markets, the safe-haven U.S. dollar and Japanese yen picked up a bid, while the growth-sensitive Aussie and Kiwi dollars erased early gains. Gold rose 0.5% and oil jumped 5% on both sides of the Atlantic.
The traditional market action signaled lingering anxiety and a sense of apprehension, given the Russia-Ukraine peace talks failed to achieve anything concrete yesterday and violence continued.
“We may see another round in the days ahead. In the meantime, don’t expect the hostilities in Kyiv to ease as the push and pull on the ground and sanctions continue,” ForexLive’s Justin Low said in a market update.
Also read: S&P 500 Conflict History Points to Short-Term Bitcoin Bounce, Sell-Off in H2: QCP
- Cryptos Retain Gains as Ukraine Security Crisis Continues to Deteriorate
- Ukraine Lawyer Says They Have Received Numerous Russian Wallet Addresses for Crypto ‘Blacklist’
- One THETA Trader Lost $11M to Liquidations as Prices Jumped 18%
- BitConnect Founder Convicted in $2.4B Ponzi Scheme Has Disappeared
- Why Crypto Terminology Is Outdated
- Ukraine Opens Polkadot Wallet for War Fundraising
- Terra’s LUNA Jumps 24% as Bitcoin Breaks $44K
- African Crypto Exchange VALR Raises $50M in Series B Led by Pantera Capital
- SOL, ETH Rise With Bitcoin as War Continues After Russia, Ukraine Hold Peace Talks
Bitcoin Sees Increased Demand from Ukraine and Russia
By Omkar Godbole
Bitcoin ended February with a 12% gain, snapping the three-month losing streak, which saw the cryptocurrency tank from $69,000 to $39,000.
Almost the entire monthly gain stemmed from Monday’s 14.5% surge, the most significant daily percentage rise since Feb. 8, 2021. Analysts cited a short squeeze and pick up in demand from Ukraine and Russia as catalysts fueling the move higher.
“In percentage terms, bitcoin recorded the largest daily candle in more than a year, gaining more than 18% day-over-day at the highest point of the rally,” Mikkel Morch, executive director at crypto hedge fund ARK36 said in an email. “While it seems that the second leg of the move was at least partially fuelled by a small short-squeeze, overall, the rally was driven by a huge spike in demand.”
Trader and analyst Alex Kruger tweeted, “Word on the street has been heavy bitcoin buying conducted by both Ukrainians and Russians. Mostly the latter. They have more money to protect.”
“Bitcoin traded at a significant premium in ruble terms on Monday,” Kuger told CoinDesk in a Telegram chat, adding, “it’s a matter of internal demand and capital controls/restricted access.”
On Monday, the Russian central bank raised borrowing costs from 9.5% to 20% and introduced some capital controls to arrest ruble’s slide brought by the West’s punitive sanctions on Moscow. Per Wall Street Journal, the Kremlin issued a decree, stating that foreign-exchange payments under loan agreements to non-resident Russians would be prohibited from March 1.
“Capital controls without demand don’t make an impact on price. Capital controls mean price will deviate to one side or the other depending or where the demand is,” Kruger said while explaining the source of Russian premium.
Data tracked by Kaiko, a Paris-based cryptocurrency research provider, show bitcoin traded at a 6% premium on dominant digital assets exchange Binance’s Ukrainian hryvnia (UAH) market compared to bitcoin’s price in the U.S. dollar market following Russia’s invasion of Ukraine. The premium perhaps stemmed from Ukrainians looking for alternatives amid disruptions in foreign exchange markets.
“Demand surged on Binance as local Ukrainian currency markets faced significant disruptions, with the Ukrainian central bank temporarily halting foreign currency withdrawals and the Ukrainian hryvnia falling to all time lows versus the U.S. Dollar,” Kaiko’s research analysts Clara Medalie and Dessislava Aubert said in a weekly newsletter published Monday.
It remains to be seen if increased demand from Ukraine and Russia is the beginning of wider adoption of the cryptocurrency as a safe haven or a one-off event.
According to ARK36’s Morch, “the biggest crypto asset is now looking at a potential decoupling from risk assets and it is doing so at a time of unprecedented uncertainty.”
“Cash used to be king in times of crisis but now rising inflation levels and broader macroeconomic woes make holding large amounts of cash risk in and of itself,” Morch added.