Bitcoin rises during Ukraine unrest

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Bitcoin Price

 

Despite ongoing tensions and hostilities in Ukraine, cryptocurrencies are regaining some lost ground as Bitcoin exploded to $44,000 per coin.

 

Eliza Gkritsi at Coindesk breaks down the situation in terms of geopolitics and some of the market responses.

 

“Bitcoin was hovering over $43,000 early on Tuesday, compared to $38,000 24 hours earlier,” Gkritsi writes. “Ether was selling over the $2,900 mark, compared to $2,600 yesterday. Bitcoin has been outperforming gold in this crisis.”

 

Nonetheless, Gkritsi notes the grimness of the geopolitical reality.

 

“Peace talks between the two sides held in Minsk last night haven’t led to any publicly known conclusions, other than to meet again,” Gkritsi writes. “The U.S. closed down its embassy in Minsk yesterday and green-lighted the partial evacuation of staff from its Moscow mission. Earlier, Belarussian politicians voted to end the country’s non-nuclear status, likely to allow Russia to place nuclear weapons on its soil.”

 

Why is Bitcoin ascendant even in this context?

 

Some seasoned analysts predict that a current Bitcoin rally won’t last.

 

Omkar Godbole, also at Coindesk, talks about new demand for the dollar, which could push Bitcoin down over the next few market cycles.

 

“The spread measures how expensive or cheap it is for banks to borrow liquidity (dollars) from other banks,” Godbole writes. “A widening spread indicates credit crunch, the likes of which were last seen during the coronavirus-induced crash of March 2020. In such situations, investors usually prefer to hold cash, mainly the U.S. dollar.”

 

On the other hand, institutional buy-in and new use cases for cryptocurrency and NFTs may bolster the sector as a whole. NFTs in particular are a hot part of the market, as new interest in the metaverse takes hold, inviting traders to ponder what things will look like in defi five or ten years from now.

 

Stay tuned if you have any related holdings.

 

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