By Marcus Sotiriou, Analyst at a UK based digital asset broker Global Block
Last week there was a risk-on sentiment following the FOMC meeting where the Federal Reserve raised interest rates by 0.25% as expected. Bitcoin hit a high of $42,400. However, yesterday and today we saw a dip to the mid-$40,000s, as there was growing fear surrounding the Russia/Ukraine war.
First, Russia gave Ukraine a deadline to hand over Mariupol at 3 a.m. UK time, and Russia’s Ministry of Defense made it clear that anyone who chooses to remain in the city will face a military tribunal organized by the Donetsk People’s Republic. Ukraine has refuse the offer To give up. Moreover, Russia is now accusing “Ukrainian nationalists” of plotting terrorist attacks on Ukrainian cities and foreign nationals “to blame Russia.” This is worrying because the Kremlin blames others for doing what it wants to regulate. Lastly, Ukraine’s defense ministry warned that another group of Russian Wagner Group mercenaries had arrived in Ukraine to assassinate President Zelensky. This event has caused a risk-off sentiment for global markets this morning, as the Dollar Index rose while Bitcoin and equities sold off.
Among the atrocities of war, Bitcoin and crypto have received great support from regulators around the world in recent weeks. Ukraine legalized crypto last week when President Zelensky signed the digital assets bill into law.
In addition, there is an easing of concerns over strict crypto regulation from the US in response to Russia potentially using cryptocurrencies to evade sanctions. The official treasury secretary said that the current crypto market is not large enough to run the economy, and the crypto ecosystem is too underdeveloped to effectively facilitate sanctions evasion on a large scale. He added that, “while it is growing as crypto use grows, its share as a medium for illicit finance is not as big as using cash alone.” This is a promising development as it demonstrates the awareness and understanding of the crypto industry from top regulators.
Senator Elizabeth Warren remained concerned, when she introduced a bill last week “to ensure that Vladimir Putin and the Russian elite do not use digital assets to undermine the international community’s economic sanctions against Russia following the invasion of Ukraine.” Despite Warren’s fears, the secretary of the treasury’s expertise holds promise for the industry.
