Bitcoin (BTC) starts a new week in the shadow of a deepening geopolitical nightmare unfolding around Russia.As retaliations for the Ukraine invasion g
Bitcoin (BTC) starts a new week in the shadow of a deepening geopolitical nightmare unfolding around Russia.
As retaliations for the Ukraine invasion grow, and the macroeconomic consequences grow with them, crypto by and large is struggling to keep up.
A curious paradox has presented itself this month: despite investors and those directly impacted by the war assumedly looking for a safe haven, that safe haven has broadly not been Bitcoin or even stablecoins.
Instead, stocks, which have taken a hit thanks to sanctions and their consequences, now form a major guide for how BTC/USD performs.
As such, the trend for Bitcoin remains down, all within the same familiar macro range, which has characterized all of 2022.
What could switch things up? Cointelegraph takes a look at a handful of factors worth keeping an eye on as the unprecedented European conflict plays out.
Macro forces signal volatile, “rough” week ahead
Historical precedent aside, it has become clear that the stock market does not “like” the current European hostilities.
Losses mounted last week, with global equities in total shedding $2.9 trillion of value. Add to that a warning that indices still seem “expensive” for the current environment and the midterm picture starts to look decidedly unappetizing.
It is not just what has already taken place which is rocking the boat — new sanctions against Russia are on the table, among them some serious issues which would only be felt on longer timeframes should they come to fruition.
Among them is a ban on Russian oil imports, a move set to upend the global status quo and trigger a seismic shift in how the economy fuels itself.
“If this happened. I would think there’d be a high probability of stocks limiting down immediately off the news,” popular trader and analyst Pentoshi reacted to news of the idea, which hit over the weekend.
Pentoshi had already sounded the alarm for stocks going forward, raising the concept of a Wall Street Crash type event triggering a modern-day counterpart of the Great Depression.
While an extreme scenario, there is nonetheless precious little to be bullish about while the conflict remains unresolved and the fallout worsens.
For Mike McGlone, chief commodity strategist at Bloomberg Intelligence, Bitcoin’s intraday performance meant that the coming week should indeed be “rough” for risk assets.
#Bitcoin May Revisit $30,000, But What of the #stockmarket? Down about 2% on Sunday morning 8am EST from Friday’s close, Bitcoin is indicating another rough week for risk assets – pic.twitter.com/FEj7hLQ08j
— Mike McGlone (@mikemcglone11) March 6, 2022
Comparing BTC/USD to the Nasdaq in particular this year, however, McGlone was not of the opinion that the only way is down.
“Bitcoin faces deflationary forces after 2021 excesses, but the crypto shows divergent strength,” part of Twitter comments read Friday.
“With 2002 losses less than half those for the Nasdaq 100, Bitcoin may be maturing toward global digital collateral.”
CME gap sets up $40,000 rematch
Should that be the case, Bitcoin hodlers are in for a choppy ride in the coming days.
Sensitive stocks combined with rocketing commodities prices — an atmosphere of stagflation in the making, some say — hardly provides fertile ground for bullish sentiment.
Overnight on Sunday, BTC/USD wicked down to $37,592 on Bitstamp, marking its lowest levels since late February and wholly erasing its subsequent gains.
Even more frustrating is that the entire move was a repeat of a previous one, cementing the current price range as more definitive support and resistance.
A look at the daily chart from Cointelegraph Markets Pro and TradingView shows just how persistent the range has been — and that in order to exit it, a breakout above the yearly open at $46,200 is needed.
For trader Matthew Hyland, however, the immediate picture suggests that such a move is unlikely.
“Bitcoin has fallen below the crucial support zone,” he warned on Monday, showing the various price levels he argues figure as support and resistance in the range.
#Bitcoin has fallen below the crucial support zone: pic.twitter.com/nmBTby77um
— Matthew Hyland (@MatthewHyland_) March 7, 2022
The latest of those to go — around $39,600 — happens to coincide with Friday’s closing price on CME Group’s Bitcoin futures market.
Given Bitcoin’s propensity to return to Friday close levels the following week, the area just below $40,000 could thus form a focus on Monday — and lay the foundations for a support/resistance flip should bulls gain momentum.
“Great choppy movements of Bitcoin, but in the end it will come back to the price of the CME close of Friday evening,” Cointelegraph contributor Michaël van de Poppe summarized.
In a subsequent tweet, Van de Poppe joined McGlone in predicting a “volatile” week ahead.
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