Crypto Prices Fade as Ukraine Conflict Intensifies

In this week's Crypto Insight I discussed...


BITCOIN KEY LEVELS TO WATCH

Lots going on in crypto last week, the initial pop to end February on Putin announcing capital controls saw a flood of money into BTC in an attempt to protect against Rouble collapsing.

However, prices faded again as risk assets remained weak and lots of noise from lawmakers around Russian individuals using digital assets to bypass sanctions.

Biden is due to sign an executive order on crypto regulation which has got market participants nervous.

CRYPTO USES IN EMERGENCY

As many bitcoiners have been pointing out, this latest conflict has highlighted many of the reasons why crypto exists and so longer term should encourage more people to embrace the digital asset space.

The impacts of crypto that have been evident so far...

  1. Donations: The Ukrainian government was able to rase 10s of millions fast by posting BTC and ETH addresses on twitter requesting donantions. Individuals from all over the world couls seamlessly send support without restrictions and banking delays

  2. Medium of exchange: With FX markets frozen, limited cash withdrawals and platforms such as PayPal prohibited, citizens are actually using BTC to make purchases, e.g some Danish journalists paid for a car in BTC after arriving in Ukraine to cover the war.

  3. Enforcement: Large crypto exchanges like Coinbase and Binance have blocked accounts of sanctioned customers such as Russian oligarchs. Suggests the regulation narrative is not true.


ON-CHAIN METRICS

Key takeaways from the BTC on-chain metrics this week:

1. STH underwater by around 15% so still could see more stopping out on weakness.

2. LTH at more breakeven levels and likely have much wider pain threshold.

3.Major bottoms have seen capitulation frommboth cohorts which leaves room for a final fluch towards 30k to be inline with previous capitulations.


CRYPTO VOL ANALYSIS

This week, crypto realized vol pulled back from elevated levels as markets drifted lower in a more orderly fashion.

Implied vols are still trading below realized but only by 5 vols (not 20!)

CRYPTO OPTIONS FLOWS

Flow-wise, with all the geopolitical noise, vol buyers have come back in, especially gamma buyers.

BTC 18Mar 34000/42000 strangle buyer, plus the usual Jun22 45k/60k call spreads.


Filmed on on Tuesday 8th March 2022.


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