Bitcoin arrested recent losses on Monday, holding around $38,000 even as as stock markets in Asia and Europe fell sharply on the prospect of Western plans to sanction Russian oil.
Oil prices shot up to their highest level since the 2008 financial crisis on the prospect of a Russian blacklist, which increased fears of another surge in inflation. This rattled sentiment in equity markets, with most Asian bourses slumping more than 2%. Foreign exchange markets also felt the pain, with the currencies of major oil-importing countries, including India and Indonesia, logging heavy losses.
Gold prices surged to above $2000, as increasingly negative sentiment boosted safe-haven demand.
Bitcoin still backed by solid fundamentals
Broader market weakness did not appear to have spilled over into Bitcoin, at least for now. The world’s largest cryptocurrency was trading steady after its latest tumble, which saw it lose 17% following a brief rally to $44,000.
The token was also trading well above the year’s lows of $33,000- hit in January. Its last steep decline, over growing fears of a Russia-Ukraine conflict, had knocked it down to $34,000 in February.
Like the broader equity markets, cryptocurrency markets have also been bleeding over the last few weeks. Investors should keep in mind that solid fundamentals still back the digital coins and institutional investors enter crypto markets with each passing day.
-Naeem Aslam, Chief Market Analyst at AvaTrade
But sentiment remains negative
With rising inflation, no signs of de-escalation between Russia and Ukraine, and a Federal Reserve rate hike due next week, traders see more losses in store for crypto assets. Stablecoins, particularly Tether, continued to see the highest trading volumes in the crypto market.
The Bitcoin fear and greed index pointed to extreme fear, indicating that sentiment was comfortably bearish. Sentiment was further rattled after Andre Cronje, a prominent developer in DeFi, abruptly said he was leaving the space, causing several altcoins to tumble. Fantom (FTM) and Anchor Protocol (ANC) slumped 18% in the past 24 hours.
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