Bitcoin hovered around the $38,000 level on Wednesday, leading a small recovery among cryptocurrencies even as the United States slapped sanctions on Russia over an invasion of Ukraine.
The token recovered 3.5% from a slump to $36,629 on Tuesday, amid some speculation that it had found its bottom. Other tokens, including Ethereum, Binance Coin, XRP and Cardano also rose from multi-week lows hit earlier.
U.S. President Joe Biden announced tough new sanctions targeting Russian banks and elites for beginning an invasion of Ukraine. The move cuts off Russia from Western finances, BBC reports.
Biden threatened more restrictions, but left the door open for diplomacy to avoid an all-out invasion of Ukraine.
The move marks a further worsening in U.S.-Russia ties, which have ravaged crypto markets over the past two weeks. Total market capitalization has slumped $300 billion from a peak hit in Feb, currently at about $1.7 trillion.
Sentiment was still clearly risk-off, with stablecoins, particularly Tether, seeing heavy volumes in the past 24 hours. Gold prices rose, while Asian stock markets sank in morning trade.
Analysts see Bitcoin at a crossroads, as it faces pressure from geopolitical tensions, as well as rising inflation and interest rates. Alex Kuptsikevich, a senior financial analyst at FxPro says-
A further decline could open a direct road to the $30,000 area, where the coin was bought back twice in 2021. Given the changed macroeconomic conditions and the pressure on risky assets, will the crypto remain as interesting at these same levels?
Some bullish signals from Bitcoin
On-chain analysis showed bitcoin holders hit a record high, indicating that demand for the token was still robust. Plan B, the creator of the Bitcoin stock-to-flow model, also said Bitcoin’s 200-week moving average indicated a bullish trend, advising investors to look past immediate volatility.
Twitter users also pointed out that 2021’s crash had been much steeper. @TheCryptoLark says-
#bitcoin currently 56 days under the 200 day MA with a top to bottom of 51% at peak sell off, in 2021 we spent 82 days under with a 55% top to bottom.
Just some perspective for you. The 2021 crash was worse, and we survived.
