The Russian invasion of Ukraine has hit global markets, including the cryptocurrency market. Analysts at asset manager Grayscale Investments have reviewed the factors affecting prices and provided their own opinion.
If you are a crypto investor and you are lucky enough not to be directly affected by the conflict in Ukraine, here is your opportunity to start reading about it. https://t.co/U9FIm1RBFo #rates #yield curve #inflation
— Grayscale (@Grayscale) February 25, 2022
Analysts noted a significant correlation of digital gold with the S&P 500 and PCT indices in early 2022. January saw a rally in risk assets, but there was a sell-off amid developments in Ukraine.
According to Grayscale, the bears believe that a further escalation of the conflict from Russia will lead to lower prices. Polar position – Russian Federation stock futures are already included in the market, so the quotes have bottomed out.
If the rally continues in the next few days or weeks, despite the abundance of “bad news”, it will be a sign of exhausted selling momentum, according to the company’s specialists.
Grayscale pointed out that markets are pricing in expectations of a Fed rate hike. Given the current geopolitical uncertainty, market participants are reconsidering their anticipation of Fed actions.
Some investors believe the risks of a rate hike are underestimated as the Fed may feel the need for more aggressive action. Others suggest the agency has been given more leeway, so it will move more gently.
Grayscale analysts are confident that the Fed will continue to monitor geopolitical developments, as well as market reaction. According to them, the reduced expectations of an interest rate hike will favorably affect risky assets, including cryptocurrencies.
The company noted that a bearish sentiment prevailed in the markets, similar to the level of anxiety seen at the start of the COVID-19 pandemic. Skeptics do not exclude that the situation could worsen and that the sale will continue. Bulls, on the other hand, expect a rally as soon as the selling momentum has already dissipated. Grayscale tends to support the second opinion.
Specialists have noticed that risky assets have historically bottomed out just before the outbreak of hostilities. They also pointed out that Russia and the United States were not going to enter the Cold War, so there is a good chance of seeing a new rally. This is also true for cryptocurrencies, according to Grayscale.
Data: Grayscale, Fundstrat.
Grayscale said bitcoin is considered a high-risk asset, but for long-term investors the resulting volatility can be a good buying opportunity. Analysts have indicated that the first cryptocurrency continues its long-term uptrend, while outperforming gold.
Roshun Patel, vice president of brokerage Genesis Global Trading, expressed a similar view.
If you think btc_marketcap/gold_marketcap -> 1.0 over time today was a great entry on this metric pic.twitter.com/WL2RdoU3UD
— Roshun Patel (@roshunpatel) February 24, 2022
As of this writing, bitcoin is trading near $38,900, over the past day the price of the asset is down 0.6%. The market capitalization of the cryptocurrency is estimated at $1.85 trillion, according to CoinGecko.
Binance exchange BTC/USDT hourly chart. Data: TradingView.
Appeal from ForkLog readers in connection with the war in Ukraine
Recall that the head of cryptocurrency exchange FTX, Sam Bankman-Fried, said he expects demand for digital gold to increase amid economic instability in Eastern Europe. associated with the war on the territory of Ukraine and the devaluation of national currencies.