War tests Bitcoin
This is the beginning of a potentially tumultuous week for the leading cryptocurrency. As the invasion of Ukraine began, the crypto market turned red, only to bounce back for a couple of days before showing another decline, although a much smaller one this time. The Western allies have now imposed much more stringent economic measures on Russia, including removing selected banks from SWIFT and freezing out its central bank. Making it impossible for the country to spend its reserves, or ‘war chest’. Furthermore, the rouble is tumbling, making life miserable for Russian citizens. How will Bitcoin fare as a result of all this?
William Suberg at Cointelegraph suggests there are five things to watch this week, as Bitcoin’s price is overshadowed by the geopolitical conflict. He says, “Bitcoin, like many other assets, is feeling the pressure.” Other markets are being equally tested, and the landscape is so unpredictable, that prices could dramatically change in minutes.
Suberg also points out that Bitcoin’s ‘safe haven’ reputation is going to be tested this week as well, as “investors look for safety and fiat bagholders look for an exit.”
So what can Bitcoin owners expect to see this week?
First, the market is going to be driven by the conflict, which is in a state of constant flux. With new sanctions arriving every day, markets will react to them. The talks between Russia and Ukraine on Monday, may give some glimmer of hope to traders, but it may be only short-term.
And, while uncertainty rules, everyone will be looking for the ultimate safe haven, which means Bitcoin’s use — whether by ordinary Russians and Ukrainians or their governments — is another factor to be taken into account. Bitcoin could become an economic tool against sanctions for both Russia and Ukraine, the latter having received millions in Bitcoin donations.
Bitcoin may the month below $38,500, which removes the opportunity to finish with its “first four straight monthly red candles since the 2018 bear market.”
But it’s not in bear market territory yet, and much remains in play this week, despite the Russian bear unsheathing its claws.