Cryptocurrencies Are Mixed In The Face Of Global Uncertainty

On Friday, most cryptocurrencies fell, reversing gains made earlier in the week. Over the last month, speculative assets such as stocks, cryptos, and commodities have seen rapid price movements, indicating a high level of investor concern. Bitcoin (BTC) increased by as much as 7% during the London trading day after Russian President Vladimir Putin stated that negotiations are progressing “positively.” Price gains were short-lived, however, as fighting between Russia and Ukraine escalated on Friday.

The United Arab Emirates (UAE) has been inundated with requests from Russian clients to liquidate digital assets worth billions of dollars.
In addition, the White House and the Group of Seven industrialized nations imposed further penalties against Russia on Friday, stating that guidance on how to utilize crypto to escape sanctions would be provided soon.

“Until a long-term cease-fire in Ukraine is in sight, near-term uncertainty will remain high. This is bearish in terms of direction for equities and credit, although circumstances have reached oversold levels “In a report released this week, MRB Partners, an investment research organization, stated. If war-related conditions alleviate, MRB forecasts a relief rally in markets.

Given the increased link between the two types of assets, Bitcoin may eventually follow the stock market’s recovery path.

Latest prices

●Bitcoin (BTC): $38,405, −3.21%

●Ether (ETH): $,2534, −3.27%

●S&P 500 daily close: $4,204, −1.29%

●Gold: $1,989 per troy ounce, −0.47%

●Ten-year Treasury yield daily close: 2.00%

Ether fading relative to bitcoin

Ether (ETH), the world’s second-largest cryptocurrency by market capitalization, is down 20% over the past 30 days, compared with a 12% drop in BTC over the same period. The underperformance of ETH and several other alternative cryptocurrencies (altcoins), which are more volatile than BTC, indicates a lower appetite for risk among crypto investors.

“The ETH/BTC cross has continued to trend lower to 0.066. Since early February, we have seen an 8% decline in the ETH/BTC cross, which we often use as a risk barometer for crypto assets more broadly,” Coinbase Institutional wrote in an email on Friday. “What it seems to be telling us is that risk appetite away from the perceived ‘safe havens’ of the asset class (mainly BTC) is still somewhat low.”

The chart below shows that the ETH/BTC price ratio is below its 40-week moving average, which is similar to what occurred during the 2018 crypto bear market.

Altcoin roundup

• Big short on tether: Fir Tree Capital Management, a hedge fund with $4 billion in assets under management, has made a sizable short bet against the stablecoin tether (USDT), according to a Bloomberg report on Friday. The position was structured as an “asymmetric trade,” meaning the downside risk is small and the potential payoff is large, the firm’s clients say. Read more here.
• Altcoin trading volume dips: Trading activity on the Coinbase has been concentrated among “safe haven” tokens such as BTC and ETH over the past week. “Further out the risk curve – even in higher profile coins like SOL and ADA – demand has dropped off as they are still trying to find viable support levels,” Coinbase wrote in a report on Friday. The exchange also noted that trading activity in meme coins such as SHIB has declined along with weak social media engagement.
• LUNA’s good week: Terra’s LUNA token is up 11% over the past week, outperforming some larger cryptocurrencies amid the war in Ukraine. “It’s the third week in a row that LUNA has secured double-digit positive returns, prompting investors to wonder how sustainable this rally is,” Guillermo Avilés, an analyst at Messari, wrote in a Friday newsletter. LUNA is down 5% over the past 24 hours, indicating a loss of upside momentum.

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