First Mover Asia: Investors Flee Crypto, Higher Risk Assets on Mounting Ukraine Tensions

Good morning. Here’s what’s happening:

Market moves: Bitcoin plummets below $41,000 as Ukraine tensions rise; altcoins also drop

Technician's take: BTC sellers remain active at resistance levels, maintaining the short-term downtrend.

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Prices

Bitcoin (BTC): $40,688 -7.8%

Ether (ETH): $2,886 -8.3%

Top Gainers

"There are no gainers in CoinDesk 20 today."

Top Losers

Asset Ticker Returns Sector Filecoin FIL −11.5% Computing Internet Computer ICP −10.6% Computing Chainlink LINK −9.9% Computing

Markets

S&P 500: 4,380 -2.2%

DJIA: 34,312 -1.78%

Nasdaq: 13,716 -2.88%

Gold: $1,898 1.52%

Market moves

Ukraine, Ukraine, Ukraine. Inflation.

Investors resumed their defensive posture as Russia seemed once again on the way to invading neighboring Ukraine. Even as U.S. Secretary of State Antony Blinken requested a meeting with his Russian counterpart, a mortar attack in the Donbas region of the Ukraine damaged multiple buildings, according to different reports.

The appetite for high-risk assets, including cryptocurrencies, tumbled. At the time of publication, bitcoin, the largest cryptocurrency by market capitalization, was trading at about $40,600, down about 8% over the past 24 hours. Ether, the second-largest crypto by market cap, was off similarly. All other altcoins in the CoinDesk top 20 by market cap were in the red.

Crypto's plunge coincided with a similar move down among U.S. equities, particularly more-volatile tech stocks. The tech-laden Nasdaq fell nearly 3%, while the Dow Jones Industrial Average and S&P 500 fell 2.2% and 1.7%, respectively.

Reports of firing in a border region and accusations that Moscow is orchestrating a false flag operation, or an intent to pin the blame for starting conflict on Ukrainian forces, "has ratcheted up tensions and led to more investors seeking less risky positions," wrote Susannah Streeter, senior Investment and markets analyst for U.K.-based, asset management firm, Hargreaves Lansdown, in an email.

In a week that featured separate reports on January's Producer Price Index (PPI), which rose to 9.8%, and the U.S. central bank's ongoing inflationary concerns discussed at its most recent meeting, investors returned to gold, which rose over $1,900 at one point Tuesday, and other lower-risk assets. "The price of gold, seen as a safe haven in times of crisis, has risen by another 1.37% to $1,896 an ounce, an 8 month high," Streeter wrote.

At the time of publication, gold was trading at $1,898.

***

Meanwhile, nearly two weeks after a meeting between its president President Xi Jinping with Russian President Vladimir Putin, China continued to weigh its response to the rising Ukrainian border tensions as it tries to balance its economic ties with Russia and the West. China imports a significant amount of oil from Russia but is also concerned by potential U.S. trade restrictions that would likely result from aligning too closely to Russia.

In a meeting with French President Emmanuel Macron, Xi called for a diplomatic solution to the brewing crisis, according to a report from China state media on Wednesday.

Technician's take

Bitcoin Pullback Deepens; Minor Support at $38K-$40K

Bitcoin (BTC) pared earlier gains after sellers reacted to overbought conditions on the charts. Resistance between $44,000 and $46,000 capped upside moves over the past month, which contributed to price weakness.

BTC was down 7% over the past 24 hours. Lower support at $38,000 and $40,000 could stabilize the current pullback into the Asia trading day.

The relative strength index (RSI) on the four-hour chart is oversold, similar to what occurred on Feb. 3, which preceded a 20% price jump. This time, however, the $46,000 resistance level could keep sellers active toward stronger support at $30,000.

Further, a series of higher price lows from Jan. 24 was broken on intraday charts, indicating a loss of upside momentum.

Important events

3 p.m. HKT/SGT (7 a.m. UTC): UK retail sales (Jan. MoM/YoY)

3:30 p.m. HKT/SGT (7:30 a.m. UTC): Switzerland industrial production (Q4 YoY)

9 p.m. HKT/SGT (1 p.m. UTC): Speech by Frank Elderson, member of the European Central Bank executive board

ETHDenver (All day)

CoinDesk TV

In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:

Circle Doubles in Value to $9B in New Deal With SPAC, Cryptos Hold Their Ground but Investors Remain Wary, CoinDesk Live at ETHDenver 2022

"First Mover" hosts spoke with Dante Disparte of stablecoin issuer Circle as the company doubles its value to $9 billion in new deal agreements with SPAC firm Concord Acquisition. Don Kaufman of TheoTrade shared his crypto market analysis.

Headlines

Japan warms up to the potential of cryptocurrencies: The crypto idea may be enduring provided users find it to be good alternative to e-money (Japan Times)

Crypto miner BIT Mining Ditches Data Center Build in Kazakhstan Due to Unstable Power Supply: The company’s bitcoin mining rigs hosted by third-party data centers in the country remain operational.

Ethereum Founder Vitalik Buterin Touts Essay Collection in ETHDenver Talk: Ethereum’s co-founder and figurehead continues his transition to a public intellectual role.

FBI Launches New Crypto Crimes Unit: The National Cryptocurrency Enforcement Team will investigate ransomware and other crimes with tools including blockchain analysis.

Longer reads

Bitcoin’s 'Energy Problem' Is Overblown:Yes, Bitcoin consumes a huge amount of electricity. But we must look at both its energy sources and its overall vision in order to fully understand the situation.

Today's crypto explainer: How to Pick the Right Play-to-Earn Game for You

Other voices: Crypto Couple Inspire Three Hollywood Projects in One Week Since Arrest(The Hollywood Reporter)

Said and heard

“If you look at consumers’ financial position and the strength of the labor market, you have to say that in general it’s pretty good.” (Joshua Shapiro, an economist at consulting firm Maria Fiorini Ramirez Inc., in The Wall Street Journal) ... "Web 3’s solutions may not ultimately be desirable, but it seems like an experiment worth undertaking." (CoinDesk columnist Daniel Kuhn) ... "This explicit call to use blockchain tech to solve big collective action problems perfectly captures Ethereum’s cultural position in the cryptosphere. The clearest contrast is with bitcoiners, who are in fact focused on a collective problem – currency management – but generally frame that in hyper-individualist terms of property and ownership." (CoinDesk columnist David Morris) ... "I certainly didn't invest in crypto. I'm proud of the fact that I avoided it. It's like some venereal disease." (Berkshire Hathaway Vice President Charlie Munger)