As Russian President Vladimir Putin presented a forceful argument for invading Ukraine, bitcoin, ether, and most other major cryptocurrencies dropped.
Market movements: As tensions on the Russia-Ukraine border grew, Bitcoin and most other major cryptos plummeted. Russian President Vladimir Putin’s remarks brought the world closer to conflict.
Technician’s Take is on pause due to the Presidents Day vacation in the United States.
Bitcoin (BTC): $37,507, down 3.1%.
Changes in the market
As a Russian invasion of Ukraine grew closer, most major cryptocurrencies plummeted on Monday. President Vladimir Putin of Russia declared in a televised address to his audience that he would recognise two pro-Russia breakaway republics in Eastern Ukraine and outlined a case for invading Ukraine, claiming that the country’s pro-Western government constituted a threat to Russia.
Earlier in the day, a Kremlin spokesman said there were no “concrete plans” for a meeting between Putin and US President Joe Biden, despite reports that 150,000 Russian troops were moving closer to the Ukraine border. Worried investors have been adopting more risk-averse tactics in recent weeks in expectation of rising oil prices, US and European allies sanctions on Russia, and Russian retaliation, all of which will likely hurt a global economy already battered by inflation and supply chain disruptions.
The Biden administration slapped sanctions against the breakaway Ukraine republics after Putin’s address. Brent crude oil’s per-barrel price soared beyond $97, an almost 4% increase.
Bitcoin, the most valuable cryptocurrency by market value, was trading at over $37,500 at the time of writing, down over 3% in the preceding 24 hours. Ether, the second-largest cryptocurrency by market capitalization, has lost around 1.6 percent in the same time frame. Other significant cryptos were all in the negatives.
The FTSE 100, the DAX in Frankfurt, and the CAC 40 in Paris all finished in the red, despite the fact that U.S. equities markets were closed for the national Presidents Day holiday. On Monday, most major Asian indices, including the Nikkei 225 in Japan, the Hang Seng in Hong Kong, and the Asia Dow, all lost territory.
Stablecoins are not available in every currency.
Because the digitization of fiat currency into tokens overwhelmingly benefits the greenback, stablecoins have been the finest thing ever for the dollar’s reign.
However, given that crypto is a haven for dollar sceptics, there must be a push to establish stablecoins with alternate denominations. There is a Tether version that is priced in Euros, and there are stablecoin initiatives that are denominated in Singapore’s dollar and Indonesia’s Rupiah, but these are just three of the hundreds of currencies available – surely there is a market for more?
The issue is that many smaller economies are wary about internationalising their currencies and relinquishing control. In those countries, the necessary components are missing for a locally denominated stablecoin to succeed.
Take, for example, Taiwan. Leo Seewald, the former chairman of BlackRock Taiwan and now a director at Taipei-based exchange MaiCoin, spoke about the firm’s new Taiwan-dollar (TWD) stablecoin over the weekend. According to the project’s website, one of the project’s benefits is “lowering the capital cost of local and cross-border transactions without intermediary.”
However, this goes against one of Taiwan’s central bank’s monetary policy pillars.
Taiwan maintains stringent capital controls on its currency, with just a few exceptions, exporting Taiwan dollars is severely prohibited. The central bank does not want the Taiwan dollar to be used abroad because China, Taiwan’s democratically run arch-rival, may use it as a weapon by market-making an unofficial exchange rate by purchasing and selling the currency at a disadvantageous rate.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.