After Russian President Vladimir Putin declared war on Ukraine on Feb. 24, 2022, a rapid sell-off occurred in the crypto market, resulting in over $500M in losses, followed by an uptrend in price.
Geopolitical pressures notwithstanding, bitcoin has climbed 35% since the Russian invasion, performing well as a safe-haven asset for hopeful market speculators. Will Clemente, a lead insights analyst at Blockchain-As-A-Service company Blockware, noted that “Bitcoin is up 35% since Russia entered Ukraine,” adding that “Bitcoin has closed above short term holder cost basis for the first time since Dec. 3. Hard to be bearish as long as BTC is above.”
Bitcoin’s price is currently up 6.9% in the last 24 hours and 15.5% in the previous week, trading at $47,663.79, some distance away from the $35,000-to-$45,000 bands it traded in as of Jan. 2022. Bitcoin is also up approximately 2% for the year, compared to the S&P500, which has dropped 4.7% in 2022. Bitcoin may experience the next resistance level at $52,000, beyond which it could reach $65000, opines Fadi Aboualfa from Copper. Other bullish sentiments came from Rick Bensignor of Bensignor Investment Strategies, who said yesterday that Bitcoin is “on the verge of a 20% run higher.”
Other cryptocurrencies are rallying, too, with ethereum up 3.7% to $3,358 on Monday and SOL, AAVE, and Dogecoin clocking in gains between 5.5% and 9.4%.
Why the bullish sentiments?
It is possible that the uptrend in Bitcoin price may be a result of U.S. Treasury Secretary Janet Yellen’s comments that crypto has benefits. Social media rumors also suggest trading was being under-girded by whales (those owning large amounts of bitcoin) from the Luna Foundation Guard that it plans to back the native token of the Terra blockchain with over $10B in Bitcoin reserves.
Bitcoin has been moving within a tight band as central banks withdraw stimulus packages injected during the COVID-19 pandemic, leaving less disposable cash for notably riskier assets such as bitcoin. Both Bitcoin and Ether have followed the uptrend of US stocks, albeit by smaller margins. “As we test the top of the 2022 trading range for the fifth time, this another one of these Bitcoin moments when the narrative could swiftly change and investors pile in, propelling the bitcoin price higher,” says co-founder of Nexo, Antoni Trenchev. “It might just be time to awaken from the Bitcoin-sideways slumber that’s been 2022.”
Bitcoin “overbought,” says Bespoke
According to Bespoke Investment Group, Bitcoin has been in the overbought range, as it traded well above its 50-day moving average of $41,085 in the last week. Generally, this precedes a downturn in prices for many assets, but with Bitcoin, the company said, an overbought state precedes an upturn in prices.