Market Wrap: Cryptos Mixed Amid Global Uncertainty

Most cryptocurrencies traded lower on Friday, reversing gains from earlier this week.

Speculative assets such as stocks, cryptos and commodities have experienced sharp price moves over the past month, indicating a high degree of uncertainty among investors.

Bitcoin (BTC) rose as much as 7% during the London trading day after Russian President Vladimir Putin said there was “positive movement” in negotiations. Still, price gains were short-lived as warfare between Russia and Ukraine intensified on Friday.

Regulatory crackdowns on crypto also added to a sour mood among traders. On Friday, Reuters reported that several crypto firms based in the United Arab Emirates (UAE) have been hit with a flood of requests by Russian clients to liquidate billions of dollars' worth of digital assets.

Also, the White House and Group of 7 industrial nations announced fresh sanctions against Russia Friday and specified that guidance on using crypto to evade sanctions will be released soon.

"Near-run uncertainty will stay elevated until a lasting Ukraine cease-fire is in sight. This is directionally bearish for equities and credit, but conditions are hitting oversold levels," MRB Partners, an investment research firm, wrote in a report this week. MRB expects a relief rally in stocks if war-related conditions ease.

Bitcoin could eventually follow a recovery path in stocks given the rising correlation between those two kinds of assets.

Latest prices

●Bitcoin (BTC): $38,405, −3.21%

●Ether ETH$3,737.16: $,2534, −3.27%

●S&P 500 daily close: $4,204, −1.29%

●Gold: $1,989 per troy ounce, −0.47%

●Ten-year Treasury yield daily close: 2.00%

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.

Ether fading relative to bitcoin

Ether (ETH), the world's second-largest cryptocurrency by market capitalization, is down 20% over the past 30 days, compared with a 12% drop in BTC over the same period. The underperformance of ETH and several other alternative cryptocurrencies (altcoins), which are more volatile than BTC, indicates a lower appetite for risk among crypto investors.

"The ETH/BTC cross has continued to trend lower to 0.066. Since early February, we have seen an 8% decline in the ETH/BTC cross, which we often use as a risk barometer for crypto assets more broadly," Coinbase Institutional wrote in an email on Friday. "What it seems to be telling us is that risk appetite away from the perceived 'safe havens' of the asset class (mainly BTC) is still somewhat low."

The chart below shows that the ETH/BTC price ratio is below its 40-week moving average, which is similar to what occurred during the 2018 crypto bear market.

Altcoin roundup

• Big short on tether: Fir Tree Capital Management, a hedge fund with $4 billion in assets under management, has made a sizable short bet against the stablecoin USDT$1.0003, according to a Bloomberg report on Friday. The position was structured as an "asymmetric trade," meaning the downside risk is small and the potential payoff is large, the firm's clients say. Read more here.
• Altcoin trading volume dips: Trading activity on the Coinbase has been concentrated among "safe haven" tokens such as BTC and ETH over the past week. "Further out the risk curve – even in higher profile coins like SOL and ADA – demand has dropped off as they are still trying to find viable support levels," Coinbase wrote in a report on Friday. The exchange also noted that trading activity in meme coins such as SHIB has declined along with weak social media engagement.
• LUNA's good week: Terra's LUNA token is up 11% over the past week, outperforming some larger cryptocurrencies amid the war in Ukraine. "It's the third week in a row that LUNA has secured double-digit positive returns, prompting investors to wonder how sustainable this rally is," Guillermo Avilés, an analyst at Messari, wrote in a Friday newsletter. LUNA is down 5% over the past 24 hours, indicating a loss of upside momentum.

Relevant news

• Justice Department Will Prosecute Banks, Crypto Exchanges That Help Russians Hide Assets: Report
• Russians Reportedly Looking to the UAE to Unload Billions in Crypto Assets
• White House, G7 Announce New Guidance Is Coming on Crypto Sanctions Evasion
• Ukraine Details What Crypto Donations Are Being Spent On
• SEC Rejects NYDIG, Global X Spot Bitcoin ETF Applications
• After ‘Doxxing’ Fracas, Bored Apes Team Starts Asking for Customer ID

Other markets

Digital assets in the CoinDesk 20 ended the day lower.

Largest winners:

Asset Ticker Returns Sector Polkadot DOT +3.5% Smart Contract Platform XRP XRP +3.1% Currency

Largest losers:

Asset Ticker Returns Sector Algorand ALGO −4.6% Smart Contract Platform Filecoin FIL −4.3% Computing Cosmos ATOM −3.9% Smart Contract Platform

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.