Monday, 28 February 2022

Market Summary

Market Summary 28 February 2022

Bitcoin Price: US$ 37,699.07 (-3.62%)
Ethereum Price: US$ 2,616.79 (-5.85%)


Market Insights – The World Takes a Dark Turn, Markets React to Ukrainian Tragedy

  • As soon as the news broke of Russia’s invasion of Ukraine, we saw a broad selloff in Asia equities with the HSI, STI, NI225, and KOSPI all falling between 2-4% on the headlines. sold off on the news; Russian equity indices were down nearly 50% at one point. U.S. equities opened lower, but snapped back to finish the day yesterday in the black. The intraday move on the Nasdaq 100 was one of the largest we’ve seen since November 2008.
  • Support at $28.5-$30.5K: If the $34K level fails to hold, the next level of market structure is the weekly levels that we’ve been harping on around $28.5K-$30.5K.
  • ETH has shown a very similar picture to BTC over the course of 2022. Interestingly, ETH has actually been the weaker of the two assets, both in terms of the magnitudes of its declines and rallies, which has continued to hold firm over the last week.
  • Support at $1.8K-$2K — Should the $2.3K support level fail, we look towards the January lows at $1.8K-$2K as the next key support level.
  • Over the last several weeks, while the world has been focused on a hawkish Fed and subsequently escalating conflicts in Ukraine, the “Bitfinex Whale” has appeared to be building a very large spot position.
  • Tether dominance is a very similar concept in that it seeks to compare the market cap of USDT to the total market cap of crypto in order to show USDT’s relative “dominance” in percentage terms. Generally, conditions tend to be bearish as USDT dominance rises, indicating people are fleeing to safe havens, such as stables.
  • It appears more than 30% of all “entities” with BTC positions are now underwater, according to data provided by Glassnode. For context, during the 2021 Summer pullback, we noticed roughly 25% of market participants underwater compared to ~30% currently (still a ways away from high point we saw during the 2018/2019 bear market though).
  • A closer look at the S&P 500 Index paints an equally grim picture, with resistance levels holding firm, and support failing to catch a bid. This kind of price action is often indicative of a paradigm shift from risk on to risk off sentiment as investors and traders transition from a “BTFD” attitude to a ‘sell the rip’ mentality.
  • Surging oil prices are a top concern right now as crude prices hit their highest levels in more than 8 years, topping out above $100/barrel at one point.
  • While an oil price spike may cause a short-term boost to inflation, elevated oil prices for a sustained period of time can cause even bigger economic disruptions.
  • Russia and Ukraine. The ability to access stablecoins that track foreign currencies outside your own may actually be the most pragmatic solution for those seeking to transport (and more importantly, preserve) their wealth in a secure, permissionless way, especially during periods of heightened volatility caused by geopolitical turmoil.


EU Commission to remove Russian banks from SWIFT cross-border network

  • The European Commission announced to remove a number of Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) messaging system, aimed at hindering Russia’s capacity to carry out cross-border payments. 
  • In a joint statement released by the European Commission, leaders from France, Germany, Italy, the United Kingdom, Canada, and the United States highlighted their shared interest in defending Ukraine from the war against Russia:
  • “We will hold Russia to account and collectively ensure that this war is a strategic failure for Putin.”


Why decentralization isn’t the ultimate goal of Web3

  • The transition from Web2 to Web3 is inevitable. Yet, as the demand for decentralization gains momentum, several important questions are being raised about the current state of blockchain technology and its promised “decentralization.”
  • Vitalik Buterin responded with a confession that “a lot of it comes down to limited technical resources and funding. It’s easier to build things the lazy centralized way, and it takes serious effort to ‘do it right.’” Or, Jack Dorsey’s recent tweet where he claimed that it’s actually the venture capitalists who own the networks that exist today.


Ukraine accepts Bitcoin, Ethereum, USDT donations amid ongoing war

  • Within the first week of the Russia-Ukraine war, the Ukrainian government has reached out to the crypto community on Twitter for raising funds to support its civilians and troops. Ukraine has now started accepting Bitcoin (BTC), Ethereum (ETH) and Tether (USDT) as donations.
  • Amid military threats through the country of Ukraine, the government of Ukraine sought help from numerous international organizations. However, considering time is of the essence, the official Twitter account of Ukraine extended its call for help to Crypto Twitter.
  • Additionally, the Vice Prime Minister of Ukraine Mykhailo Fedorov also shared three crypto wallet addresses urging the crypto community to donate and help Ukraine fight against the Russian troops. While the BTC and ETH addresses remain the same, Fedorov’s USDT wallet address is TRC20-based (different from the address shared by Ukraine’s official Twitter handle).


Seizure of Bitfinex funds is a reminder that crypto is no good for money launderers

  • As public understanding of how digital assets work becomes more nuanced along with the mainstreaming of crypto, the language of Bitcoin’s (BTC) “anonymity” gradually becomes a thing of the past. High-profile law enforcement operations such as the one that recently led to the U.S. government seizing some $3.6 billion worth of crypto are particularly instrumental in driving home the idea that assets whose transaction history is recorded on an open, distributed ledger are better described as “pseudonymous,” and that such a design is not particularly favorable for those wishing to get away with stolen funds.
  • No matter how hard criminals try to obscure the movement of ill-gotten digital money, at some point in the transaction chain they are likely to invoke addresses to which personal details have been tied. Here is how it went down in the Bitfinex case, according to the documents made public by the U.S. government.


European Parliament postpones crypto bill vote over proof-of-work

  • The parliament of the European Union is delaying a vote on a framework aimed at regulating cryptocurrencies amid concerns over proof-of-work mining.
  • In a Friday Twitter thread, European Parliament economics committee member Stefan Berger said the government body had canceled a vote on the Markets in Crypto Assets, or MiCA, framework scheduled to take place on Monday. Berger said parliament needed to clarify “the question of proof-of-work” in discussions with stakeholders to ensure a proper legal framework, adding that some might misinterpret the proposal as a ban on crypto.
  • “The discussion about MiCA indicates that individual passages of the draft report can be misinterpreted and understood as a [proof-of-work] ban,” said Berger. “It would be fatal if the EU Parliament sent the wrong signal with a vote under these circumstances.”


Goldman Sachs exec joins Coinbase: ‘It’s time to embrace the cryptoeconomy’

  • Roger Bartlett, a Goldman Sachs veteran who has held various positions at the firm since 2005, announced he would be moving to Coinbase.
  • In a Friday announcement on LinkedIn, Bartlett said he would be running global financial operations at Coinbase after 16 years at the investment banking giant. The now-former global co-head of operations for global markets at Goldman Sachs said he would be working with Coinbase chief financial officer Alesia Haas, president and chief operating officer Emilie Choi, vice president of institutional products Greg Tusar, and head of institutional sales Brett Tejpaul to help users “embrace opportunities offered by digital assets and its ecosystem.”
  • “It’s time to embrace the crypto economy,” said Bartlett. “It’s time to […] follow my passion to help enable the next generation crypto economy. The inspiring purpose-led mission to create economic freedom in the world, in a customer first, automation first approach is a once-in-a-lifetime opportunity to be part of building the next stage of the digital evolution.”


Apple Pay to halt support for Russian banks sanctioned on war in Ukraine

  • Apple reportedly removed mobile applications by the sanctioned Promsvyazbank on Wednesday, with at least three apps being removed from the App Store. Google reportedly removed the bank’s main application from its store as well.
  • Russians have been increasingly withdrawing money from their bank accounts as some officials have warned about banks potentially seizing retail deposits in the event sanctions go too far. Users reportedly withdrew 111.3 billion rubles ($1.3 billion) from Russian banks on the first day of Russia’s invasion of Ukraine, the biggest outflow since the start of the COVID-19 pandemic two years ago.
  • The significant bank outflows have apparently continued, as many customers online continued to report ATMs running dry and large queues to cash out on Friday.
  • While some on-chain data suggests that Ukrainians have been increasingly moving into crypto in the aftermath of Russia’s invasion, it can be difficult to get recent data on Russians’ crypto exposure as the country has no legal exchanges that track trading volumes. Major locally operating exchanges like Binance declined to comment on the matter to Cointelegraph.

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