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Crypto Market Forecast: Week of February 28th 2022

A volatile week for crypto ended with the price of Bitcoin (BTC), and most other large-cap digital assets, down marginally. BTC ended the week down ~2%, while Ethereum (ETH) and Binance-coin (BNB), the 2nd and 3rd largest assets on the BNC market cap table, fell by ~1% and ~3%, respectively.

Bitcoin (BTC) ended the week trading around the ~US$37,300 price. However, at one point on Thursday it dipped to as low as US$34,572 on the Bitcoin Liquid Index (BLX) before mounting a weekend recovery.

The initial sell-off began after Russia confirmed on February 24th that it would launch a “special military operation” in Ukraine. The operation involves an invasion and attempted forceful demilitarization of Ukraine’s armed forces. Over the course of the week, Russian troops have spread across the North, East, and South of the country in cities like Kharkiv, Donetsk, and Mariupol. Military airstrikes and artillery have been used by the Russian forces to spread their presence and occupation of Ukraine.

The digital asset late-week rally appears to have been driven by statements from American President Joe Biden who affirmed that US troops would not be sent to Ukraine. Biden said America’s plan to diminish Russian aggression would be to impose strong financial sanctions and limit the ability of the country to deal in foreign currencies.

America, and other major geopolitical powers like the EU, and Japan, announced that they will take a backseat in the conflict. This appears to have given investors some relief that the issues in the region will not be more widespread.

The situation in Ukraine, however, is far from resolved and continues to affect the sentiment of traders. Today, Western nations came together to ban some of the major Russian banks from using the SWIFT messaging system for international bank transfers. This move is designed to cripple Russia’s central bank reserves. Additionally, financial service providers Societe Generale SA and Credit Suisse Group AG stopped financing commodities trading from Russia.

Also on the last day, officials from Kyiv have confirmed that they will hold peace talks with Russian counterparts at the Belarusian border.

While this may signal a positive turn in the ongoing conflict, elsewhere, there are signs that tensions are not set to deescalate anytime soon. Ukrainian President Volodymyr Zelenskiy has said that he is skeptical that the talks will be fruitful, but has said he would try anything for peace in Ukraine.

Despite the reports of peace talks, Russian President Vladimir Putin has put his country’s nuclear forces on high alert. Satellite imagery has shown that there is a huge three-mile convoy of Russian military equipment just outside of Kyiv.

Russia’s unwillingness to back down has appeared to again spook investors. Bitcoin (BTC) is down ~6% on the last day. Assets further out on the risk spectrum appear to be slipping even further with Ether, Solana (SOL), and Avalanche (AVAX), down ~6%, ~9%, and ~12% over the same period.

Crypto news for the week ahead

__2nd March- Fed Chair Jerome Powell testifies at House committee__

A major week for short-term economic announcements will begin with Federal Reserve chairman Jerome Powell speaking in front of the House Financial Services Committee on March 2nd and appearing before the Senate Banking Committee on March 3rd. Investors will get further insight into how the Fed is set to use hawkish monetary policy to combat decades-high inflation rates and if America’s connection to the conflict in Ukraine will affect short-term monetary policy decisions.

__3rd March – US jobs data released__

In January 2022, 467,000 new payroll jobs were added to the US economy, and revisions further pushed this number to 500,000. On Thursday we’ll find out if the positive economic trend continues. Economists are predicting it will, with new hospitality and leisure jobs expected because of the upcoming spring break season and gains in everything from manufacturing to professional business services post an Omicron-driven lull. Bitcoin and digital assets have, in the recent past, responded positively to US jobs data.

Top 10 Crypto Summary

It was a volatile, see-saw week for most large-cap assets in crypto apart from a few standouts. LUNA, the native token of the Terra network was up nearly 50% in the last week. Early in the week, a non-profit called Luna Foundation Guard (LFG), announced that it had raised US$1 billion to create a protective layer for UST, The Terra ecosystem’s native USD stablecoin, which is also protected by LUNA holders. The new fund will add to the long-term stability and security of the Terra ecosystem.

__Bitcoin Price Chart__

Bitcoin’s (BTC) rollercoaster price week matched much of the movement observed in traditional equities. The correlation between crypto and equity indices like the S&P 500 (SPY) is currently at multi-year highs with BTC trading more like equities than a safe haven asset. Data from Glassnode reports that historically it has taken the SPY 47-days on average to recover after an armed conflict. If the correlation between BTC and the SPY holds, will BTC begin shooting up in value a month and a half after the Ukraine conflict?

   

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