Market Wrap: Cryptos and Stocks Rise on Possibility of Russia-Ukraine Talks

Bitcoin (BTC) and other cryptocurrencies rose on Friday after Russia agreed to negotiatehttps://www.marketwatch.com/story/russia-says-it-agrees-to-talks-with-ukraine-271645796235 with Ukrainian officials.

"Vladimir Putin is ready to send to Minsk a Russian delegation," Kremlin spokesman Dmitry Peskov told reporters on Friday. Still, the situation was unstable, especially after Russian forces intensified attacks on Ukraine’s capital in recent days. The Russian president later made comments suggesting that he was not serious about participating in talks.

Meanwhile, global markets were in a state of flux as investors tried to make sense of geopolitical moves. The S&P 500 stock index rose over 2%, while Russia's ruble ticked higher, albeit near its weakest level on record.

In crypto markets, bitcoin underperformed most alternative cryptocurrencies (altcoins) on Friday, suggesting a greater appetite for risk among investors. BTC was roughly flat over the past 24 hours, compared with a 5% gain in XRP and a 10% rise in Terra's LUNA token over the same period.

Some investors expect the rebound in crypto prices to continue because of the spike in volatility. Bitcoin's one-week implied volatility jumped to an annualized 75% on Thursday, topping the one-, three- and six-month gauges, similar to what occurred after the May 2021 crash. Further, bitcoin's inverted volatility structure typically precedes price bottoms, according to CoinDesk's Omkar Godbole. Implied volatility refers to investors' expectations for price turbulence over a specific period.

Volatility spikes can be short-lived, however, which could delay a significant upswing in BTC's spot price.

"These spikes in spot price would probably be met with aggressive spot selling, capping the topside," QCP Capital, a Singapore-based crypto trading firm, wrote in a Telegram announcement this week.

Latest prices

●Bitcoin (BTC): $3,9093, +2.28%

●Ether (ETH): $2,710, +2.66%

●S&P 500 daily close: $4,385, +2.24%

●Gold: $1,892 per troy ounce, −1.73%

●Ten-year Treasury yield daily close: 1.99%

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.

Volume spike

Similar to volatility, bitcoin's trading volume across major exchanges reached the highest level since the Dec. 5 price crash, according to CoinDesk data. Typically, high-volume sell-offs indicate capitulation, which could lead to short-term price jumps.

Over the past 24 hours, the ratio of buy volume relative to sell volume was slightly higher, indicating bullish sentiment among traders, according to data compiled by CryptoQuant.

Still, trading volume has trended lower over the past few months.

"Consumer volumes on the exchange remain tepid despite large moves in the crypto space, suggesting reduced risk appetite and light overall positioning in markets," David Duong, head of institutional research at Coinbase, wrote in a Friday email to clients.

Coinbase reported its fourth-quarter earnings on Thursday, which beat revenue estimates. However, the exchange warned shareholders about high volatility, and stated that trading volumes could decline during the first quarter of this year.

Altcoin roundup

• Terra's LUNA surges: LUNA, a token of the decentralized payments platform, rose as much as 27% in 24 hours to regain $25 billion market capitalization in early European hours on Friday. The price spike was among the biggest for LUNA after months of downward movements. Still, the price is down 30% from December's all-time high of $103. Earlier this week, Singapore-based non-profit organization Luna Foundation Guard (LFG) said it would create a bitcoin-denominated reserve as an additional layer of security for UST, Terra's decentralized stablecoin. Read more here.
• Ethereum mining pool Flexpool halts all services to Russia: Flexpool, the world's fifth-largest Ethereum mining pool, became possibly the first of its ilk to cut services to Russian users following the country's invasion of Ukraine. The move was taken to show solidarity with Ukraine. "We generally do not get involved in politics despite our personal views as a company," a Flexpool spokesperson said in a message on Thursday evening on its official Telegram channel. Read more here.
• Ethereum gets an upgraded scaling testnet: zkSync, a protocol responsible for implementing Ethereum scaling platforms, announced the test network release of an Ethereum Virtual Machine-compatible Zero-Knowledge rollup (zkEVM) years ahead of schedule. The EVM is the environment in which all Ethereum wallets and contracts live and is responsible for defining the rules of the chain from block to block. Read more from CoinDesk's Edward Oosterbaan here.

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Other markets

Digital assets in the CoinDesk 20 ended the day higher.

Largest gainers:

Asset Ticker Returns Sector Cosmos ATOM +9.9% Smart Contract Platform Polygon MATIC +5.6% Smart Contract Platform Internet Computer ICP +5.3% Computing

Largest losers:

Asset Ticker Returns Sector Bitcoin Cash BCH 0.0% Currency

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.