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Analysis

Will crypto markets continue to rise with sanctions on Russia?

bitcoin

While investors are eyeing the impact on the commodity markets of Russia’s sanctions, the crypto world is enjoying a lift with the geopolitical tension unfolding. Bitcoin has surged 15% and ethereum spiked 12% in the last 24 hours, amid the interbank removal of rouble transactions in the forex markets.

Cryptocurrency's market cap rose 11.85%, to $1.90tn (USD) in the last 24 hours, with bitcoin’s trading volume spiking to the highest since May 2021, according to CoinMarketsCap. The trading volume in Ukrainian UAH and Russian rouble have been pumped up by the two countries' conflict in the last two weeks.

According to Russian government-estimated data, Russia owns $214bn (USD) worth of cryptocurrencies, or 12% of the crypto assets worldwide. It is expected that the country may push the legalisation of bitcoin investment to reduce the impact of sanctions. The decentralising functions of these digital coins might be used by Russian and Ukrainian owners to hedge losses in the fiat markets. But the risk remains if major crypto exchanges impose sanctions on Russian users. Binance is blocking Russian clients who are targeted by sanctions, but will not stop other accounts in Russia, according to Reuters.

The Fear & Greed index is used to analyse the behavior of investors; the lower number, the more fear. When it is at the extreme fear at 0, usually panic-selling happens and establishes a buying opportunity, and vice-versa. It moved from the extreme fear at 20 yesterday to 51 at Neutral.

Bitcoin daily chart

From a technical point of view, bitcoin has established a bullish breakout at the downward trendline early in February. 

  • Bitcoin’s bullish moment is most likely to keep and test the imminent potential resistance at $45,700 (approximately), the February high, also the Fibonacci retracement of 38.20%.
  • The MACD shows the upside momentum has taken off with a golden cross being formed.
  • A new wave of upside momentum is to be established once the price breaks through the key resistance at $45,700, then heading to the next potential target at the 100-day MA at $50,000 (Fib. 50.00%).
  • With the historical Volatility Index pointing up, a potential imminent pullback may be near, with the key potential support at the 20-day MA at $40,700.


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