A week of highs, lows, and compassion in the crypto world

Traders were hopeful earlier last week that Bitcoin and other digital currencies were about to break out of the recent rut. But, after hitting a high in the $45,000 range, the world’s first digital currency slid back under $40,000 as the crypto and fiat worlds struggled to find an even keel in the wake of the Russian invasion of Ukraine.

“Having now been in a drawdown from the November ATH for 138-days, the conviction of many Bitcoin investors, mostly those whom bought near the top, has been significantly challenged this week,” on-chain analysts Glassnode said in its note last week.

“What we will observe is that top buyers have almost completely capitulated now. However, the remaining distribution of holders appear to be of a far higher resolve, arguably reflecting the unwavering conviction of the buyers of last resort: Bitcoin HODLers.”

Those who bought during Bitcoin’s price surge and all-time-high in November have sold out, Glassnode reports, which is good news for those who are buying up the coin at the current price range.

“This spending behaviour describes a market dominated by price insensitive HODLers, who appear unwilling to liquidate their coins, even if held at a loss,” Glassnode said. “Meanwhile, top buyers have been significantly flushed out, and represent a far smaller proportion of the investor cohort when compared to May-July 2021.”

HOLDers, who have been through crypto’s ups and downs before, face uncertainty on all fronts.

“Not to be forgotten is the U.S. Federal Reserve, with Chair Jerome Powell on Tuesday — worried about the economic impact from the Russia-Ukraine war — nevertheless promising a 25-basis point rate hike later this month,” CoinDesk reported. “The U.S. central bank doesn’t need more ammunition for tightening monetary policy but got some anyway in Friday’s nonfarm payrolls report. The data showed a whopping 678,000 jobs added in February versus expectations for just 400,000.”

In the meantime, the U.S. government continues to move forward in exploring how to integrate digital currencies into the mainstream. “Spent my day at the #senate with a bi-partisan group of policy makers who get the joke on #crypto,” tweeted crypto investor Kevin O’Leary. “They are working on policy that will open these markets to institutional investors!”

O’Leary thanked pro-bitcoin Senator Cynthia Lummis of Wyoming for the visit to Capital Hill. “The good news is they are all over it and agree there is tremendous opportunity once they pass policy. Stay tuned. I left them feeling optimistic.”

Traders continue to wait for lawmakers in the US and Europe to finally release their plans to provide formal frameworks for digital currencies. The decisions on how to integrate crypto with the fiat world are expected to have a significant impact on the mainstream adoption of digital coins as well as the fortunes of those who hold them.

As all markets continues to stutter amid crisis, traders who are riding the ups and downs of their holdings nonetheless are opening their wallets to support Ukraine.

“More than $50 million in cryptocurrency has been raised for Ukraine in the time since Russia began military operations in the nation last week,” Cnet reports. “Many of these donations have been made directly to the Ukraine government. Mykhailo Fedorov, Ukraine’s minister for digital transformation, tweeted wallet addresses for cryptocurrency donations, which was also tweeted by Ukraine’s official twitter account. Over $47 million in cryptocurrency has been donated in this way, says Elliptic, a blockchain analysis firm.”

Digital coins are also providing relief to individuals affected by the crisis, who are finding access to their funds is difficult.

“Ukrainians, meanwhile, may be turning to stablecoins — tokens designed to maintain a fixed value — as they face restrictions on foreign exchange, bank withdrawals and electronic money transfers imposed by the National Bank of Ukraine,” Barron’s reported earlier last week.

“There are a lot of positive elements to this story,” Marc LoPresti, managing director of Strategic Funds, a hedge fund manager with crypto funds in its portfolio, told Barron’s. “In Turkey, a lot of folks have avoided financial devastation by allocating to decentralized currencies like Bitcoin. You’re seeing that in context of Ukraine and Russia — it’s being used for humanitarian purposes.”

Joyce Pavia Hanson

Contributor

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