Analysis

All about Bitcoin’s reaction after Russia “declared” war on Ukraine

As tensions escalated on the Russian-Ukrainian border in the early hours of Thursday, major asset classes around the world fell, including cryptocurrencies. The situation is looking bleak given ground images in Ukraine showing explosions in the capitals of Kiev and Kharkiv.

In fact, it was the Minister of Foreign Affairs of Ukraine explain Russia carried out a “full-scale invasion” of the country.

Other observers have also begun to refer to the conflict as a “war”.

According to CoinMarketCap, the global crypto market is currently down more than 9% over the past day. For example, Bitcoin is down over 9% at press time.

Technically, Bitcoin has fallen below a key support level due to the current conflict. It is currently trading below the 50 and 200 moving averages, which will also act as hard resistance.

However, at the time of writing, the RSI is below 30 and in the oversold territory. For some, this means the leading cryptocurrency is about to reverse.

BTC/USDT | Source: TradingView

Bitcoin’s volatility also surged amid this FUD, with a reading of more than 80%. The increased volatility in the market will eventually lead to increased potential volatility (IV) and mass liquidation of long positions in both options and futures.

Bitcoin Volatility Index (BVIN) | Source: Glassnode

The volume of net bitcoin flows through the exchange also increased dramatically. Especially as more and more investors and traders are trying to exit their positions to wait for the situation to calm down.

Bitcoin inflow volume through exchanges | Source: Glassnode

The Bitcoin network real profit/loss indicator also slipped above -$320 million in a matter of hours – showing mass profit-taking across all exchanges. This correlates closely with the two metrics above.

Real Bitcoin Network Gain/Loss | Source: Santiment

Data from Glassnode also shows that the funding rate is turning positive. Accordingly, holders of long positions in bitcoin futures contracts pay less in the long run and are profitable. If this continues for an extended period, these long positions could be forced to liquidate their losses and exit the market to cut losses.

The mass liquidation of longs will immediately push the futures market lower and lead to a catastrophic bear cycle.

However, not everything looks bad. Certain metrics also appear to suggest that Bitcoin has an attractive valuation to “buy the dip.” For example, DAA – corrected divergence that flashed big buy signals everywhere.

Correction of DAA price divergence | Source: Santiment

Additionally, the recent drop has resulted in many protracted liquidations in the market. However, on closer inspection Data from Coinglass.com shows that this is not having too much of an impact. Only $233 million in Bitcoin was liquidated today, which is very little compared to the January 21, 2022 and December 4, 2021 liquidations. On those days, $987 million and $1.58 billion were liquidated respectively.

Liquidation of Bitcoin | Source: Coinglass.com

To sum up, while the situation in the crypto market so far is scary, it doesn’t look too bad. The easing on the Russian-Ukrainian border could bring renewed optimism to Bitcoin and the crypto market.

Join CoinCu Telegram to keep track of news: https://t.me/coincunews

Follow CoinCu Youtube Channel | Follow CoinCu Facebook page

Annie

Championing positive change through finance, I've dedicated over eight years to sustainability and environmental journalism. My passion lies in uncovering companies that make a real difference in the world and guiding investors towards them. My expertise lies in navigating the world of sustainable investing, analyzing ESG (Environmental, Social, and Governance) criteria, and exploring the exciting field of impact investing. "Invest in a better future," I often say. That's the driving force behind my work at Coincu – to empower readers with knowledge and insights to make investment decisions that create a positive impact.

Recent Posts

Gate.io Launches USDE Financial Products with Annualized Returns of Up to 54%, Ushering in a High-Return Era for Stablecoin Investments

Nov 18th, Panama - Gate.io, a global leader in digital asset trading, has officially unveiled…

18 minutes ago

Bitdeer Convertible Notes Worth $360 Million Offered for Expansion Efforts

The Bitdeer convertible notes offer a 42.5% conversion premium, allowing conversion into cash with the…

47 minutes ago

Sui Foundation Enters into Strategic Partnership with Franklin Templeton Digital Assets

Grand Cayman, Cayman Islands, 22nd November 2024, Chainwire

1 hour ago

Best Cryptos to Invest in December 2024: Qubetics Surges Past $2.6M as Solana Records Big Whale Pump and Polkadot Aims for $6

Best Cryptos to Invest in December 2024: Qubetics surges past $2.6M, Solana’s whale pump ignites…

3 hours ago

Bitcoin Trader Turned $100M in His 20s—Now Reveals 5 Altcoins to Build a $50M Portfolio, With Memecoins Leading the Way!

As Bitcoin reaches unprecedented heights and the market surges, he's highlighting five altcoins poised for…

4 hours ago

Which Crypto Will Explode in the 2024-2025 Bull Run?

With the crypto market reaching new peaks, many are eager to discover digital currencies poised…

4 hours ago

This website uses cookies.