"Bitcoin is an unwitting participant in Russia-Ukraine volatility"; Is $30.000 the destination?
The cryptoassets market holds its positions on Wednesday after recent losses, accompanying the rest of the global markets that seem to take a breather after a Tuesday of high stock market tension. The movement of Russian troops into the separatist regions of eastern Ukraine, in what the Kremlin called a "peacekeeping" mission, provoked a response from the US and Europe in the form of economic sanctions, while US President Joe Biden called the Kremlin's military action an "invasion" of Ukraine.
Bitcoin managed to cling to $38,000 on Tuesday, the price above which it also trades at on Wednesday, but it left lows for the second consecutive day below the support that most analysts place at $36,500, with $37,000 as a control zone that is more psychological than technical. The price action invites pessimism as the digital currency suffered sharp declines after unsuccessfully facing resistance at $45,000 and there are more than a few who believe that $30,000 is back in play. However, "on the side of the supports, the most important of them all is at the January lows at $32,855," warned José María Rodríguez, analyst at Bolsamanía. "$32,500 looks more like the 'point of no return,'" agreed John Kicklighter, chief strategist at DailyFX.
"The Russia and Ukraine crisis is affecting all risk markets at the moment, not just Bitcoin," commented Nicholas Cawley, strategist at DailyFX. "The constant swings of good and bad news are making it difficult to value and trade the market at the moment," noted the expert, who believes that until this changes "it is hard to see any reason to trade Bitcoin from the long or short side."
The expert thinks that, from a technical perspective, the break below support at $39,600 left Bitcoin vulnerable to further losses. This negative outlook overshadowed recent good news from the market, "whose fundamentals are improving by the day," noted Naeem Aslam, analyst at AvaTrade. Ukraine legalized Bitcoin and Russia is in the process of doing the same for investments in digital currencies. Also, Fidelity's launch of a Bitcoin ETF in Europe and news that BlackRock, the $10 trillion asset manager, is preparing to offer cryptocurrency support for its clients has transpired. These reports "would normally give the cryptocurrency a boost to the upside, but this has not been the case," stated Cawley.
According to analysts, Bitcoin is going to remain in a sideways movement with a marginal downward bias "until the conflict in Eastern Europe is resolved," the DailyFX analyst insisted. "Bitcoin is an unwitting participant in the volatility that is affecting all risk assets due to tensions between Russia and Ukraine," explained Edward Moya, an analyst at Oand. "The cryptocurrency roller coaster won't end anytime soon, but it could get ugly if Wall Street suffers further selling as investors begin to expect a prolonged military conflict."
The cryptocurrency queen could fall victim to a cash scramble, Moya commented, "but once the wave of panic selling passes, long-term bets would quickly return. Moya added that "hodlers could be tested soon," using the term for cryptocurrency investors who hold their positions regardless of price.
ALTCOINS CUT SHARP DECLINES
In other market news, the performance of 'altcoins' emulated Bitcoin, with most partially recovering from Tuesday's bloodletting, as sell-offs were swooped up in tokens such as Cardano, Solana, XRP or Terra. Most hold notable losses over the past seven days, despite being tinted green for the past 24 hours and the total market capitalization has risen to $1.73 trillion.
Ethereum withstood bearish pressure above the $2,500 support and is moving above $2,600, but experts believe it remains exposed to further declines before it stabilizes, as it accumulates losses of 15% in the last seven days. Ether - the Ethereum network unit - has multiple strong support levels at $2,200 and $1,850 and technical analysts do not believe it will settle below $1,800 in the short term. In general, they indicate that any drop below these levels is a buying opportunity.
According to the chart below, weekly support is around $2,000, but there is a strong possibility of a break below this price level, according to technical analysts.