Bitcoin (BTC) and the broader crypto market continued to rise sharply today as more analysts drew a parallel between the current market action and Bitcoin’s role as sovereign money in a world heavily affected by war and sanctions. According to the crypto exchange Bitfinex, the war in Ukraine could prove to be the first “big test case” for Bitcoin.
At 15:50 UTC on Tuesday, BTC stood at USD43,639, up 7% for the day and almost 18% for the week, after breaking the USD40,000 mark sharply yesterday.
The strong bullish action led to a flood of leveraged short BTC positions that were liquidated in the market. According to Coinglass, liquidations reached a peak during the 12-hour period from noon to midnight on Monday, when USD 119m was liquidated in BTC short positions, as the price rose well above the USD40,000 level.
Bitcoin’s price gains came as more capital poured into regulated mutual funds holding the digital asset last week.
According to crypto research and investment firm CoinShares, digital investment products recorded inflows of USD 36 million last week, despite the tensions in Ukraine, which turned into a full-scale war on Thursday.
Of this total, USD 17m has been added to Bitcoin investment products, marking the fifth consecutive week of inflows, the company wrote.
It is worth noting that the inflows were smaller than a week ago, when USD 109m in total flowed into digital investment products and USD 89m of it flowed into Bitcoin-backed products.
Hong Kong-based crypto-financial services company Babel Finance commented on Bitcoin’s current lineup from a technical point of view, saying in its latest weekly report that the USD 40,000 mark will be “a turning point” for Bitcoin and that this may indicate further upward movement in the short term.
“In the short term, US dollars will become a turning point. That is, more traders can be mobilized if the price can return to above USD 40,000,” the company said in its report, published shortly before BTC broke through the key level.
Meanwhile, others focused on how the recent gains for Bitcoin and the rest of the crypto market have come at a time when stocks have been showing mixed performance, which could indicate a decoupling of the two asset classes. “We’ve seen crypto closely correlate with the U.S. Stock market for months, but Bitcoin is showing signs of decoupling from that correlation in the short term,” Marcus Sotiriou, an analyst at digital asset broker GlobalBlock, said in emailed comments. He added that the top cryptocurrency is likely fueled by “the narrative of being a permissionless and censorship-resistant way of transferring value,” and said it’s “fascinating” that it has surpassed even the traditional safe haven gold. A similar sentiment was shared by Mikkel Morch, executive director & risk management at crypto hedge fund ARK36, who said that “a possible decoupling of risk assets” is taking place and that Bitcoin is gaining importance as censorship-resistant money.
“Therefore, let’s see the beginnings of a wider acceptance of Bitcoin as a hedge – not only for investors, but also for ordinary citizens,” Morch said, before adding:
“We will know for sure on the other side of this crisis, but we can already say that we are currently observing historical shifts in power in real time – and crypto is at the center of the raging storm.”
The same view was also shared by the Bitfinex trading team, which in a comment with * * said that Bitcoin’s “unique properties” are now finally receiving more attention. “In these dangerous and uncertain times, Bitcoin is not capitulating, as many of its critics had predicted. In fact, we may be experiencing the world’s first major conflict in the age of cryptocurrency, and this is proving to be a great test case to see how Bitcoin performs,” the trading team wrote. In addition, the crypto analysis company Coin Metrics also pointed out the role of Bitcoin in the conflict, saying in its latest report that interest in the coin has increased in Ukraine and Russia over the past week.
Meanwhile, on-chain analytics company Glassnode also offered optimism in its latest report, saying that investors who bought Bitcoin near the top of the market have now “almost completely capitulated.”
“[.” The remaining distribution of holders appears to be of far greater determination, which arguably reflects the unwavering conviction of the buyers of last resort: Bitcoin hodlers,” the report added.
Finally, veteran investor Mark Mobius, a former World Bank adviser and former chairman of the board of Templeton Emerging Markets Group, commented on the movements of the Bitcoin price from the world of traditional finance, saying that Bitcoin is now proving itself, especially for Russian asset owners. “I would say that’s why Bitcoin is showing strength now, because the Russians have a way to get money out, get their wealth out,” the investor told CNBC, adding that “otherwise they’re really in trouble.”
The comments of the legendary investor came, although last year he said about Bitcoin that “it’s not an investment, it’s a religion.” This time, however, he seemed more open-minded, saying: “If I were a Russian, I would be a buyer [of Bitcoin].”