War Rages On in Eastern Europe
Bitcoin Erases Losses after a War-Induced Decline
by Bogdan Giulvezan
The flagship cryptocurrency – Bitcoin – has dipped to a low of $34,324 as a direct consequence of the full-scale military clash that is currently scorching Ukraine. The losses were quickly erased and currently, BTC is trading at $38,400, above support but still below the important mark at $40,000.
Russia’s largest index fund (IMOEX) crashed 45% as Vladimir Putin started a “special military operation” for the “demilitarization and de-Nazification of Ukraine”. Some of the losses were recouped a day later but the index is still in the red.
Ukraine’s top crypto exchange Kuna more than tripled its trading volume soon after the attack was launched. The daily volume before the attack was roughly $1.5 million but surged to almost $5 million on Thursday, 24 February. Also, Bitcoin’s price on the Kuna exchange soared above $41,500, diverging from the price seen on all other exchanges. Today, Kuna’s volume dropped to around $2.5 million and Bitcoin’s price returned to normal.
The attack on Ukraine triggered economic sanctions from the United States and other countries against Russia. Also, there are talks of excluding Russia from the SWIFT payment system, which may push the country towards using Bitcoin and crypto on a large scale.
Furthermore, U.S. President Biden said that he is in agreement with G7 leaders to exclude Russia from the global economy and to limit access to the major currencies: “We will limit Russia’s ability to do business in dollars, euros, pounds, and yen to be part of the global economy. We’ll limit their ability to do that”.
If they cannot use USD, JPY, GBP anymore, would Russians turn to Bitcoin? According to Bloomberg, Russian oligarchs may shift to crypto to circumvent any financial restrictions. After all, there’s no censor on the Bitcoin network and funds can be sent without the involvement of a bank or any other third-party middleman. And if this will be the case, what will happen to Bitcoin’s price?
Technical Outlook – BTC/USD
The fact that Bitcoin dipped to $34,324 and recovered very swiftly, shows underlying strength even if the asset is under pressure generated by the Ukrainian crisis. It is currently trading just above $38,000 after reaching as high as $39,700 yesterday. This shows that the bulls are not strong enough to break the key level at $40,000 and until that happens, Bitcoin is in peril of dropping below $37,500.
A break of the mentioned support level will likely take Bitcoin closer to the bearish trend line drawn from the high made in November 2021 and into the yearly low at $32,950. Keep in mind that the technical side will be overshadowed by the fundamental scene during the days and weeks to come, so make sure you keep an eye on the news.
