Weekly crypto report (21-25.02.2022)

The last week of February brought relatively pessimistic sentiment on the cryptocurrency market. All because the darkest fears regarding Russia's invasion of Ukraine materialized. Markets reacted immediately, capital drifted away to safe haven assets like the dollar, yen and franc.

The stock market fell sharply as well, especially tech companies which are closely correlated with the overall sentiment in the crypto market. However, the situation seems to be turning around due to several factors.

Firstly, global investors seem to follow the well-known saying "buy the dip" constantly. The FED has not finished printing the money yet, and the conflict in the East may cause a tightening of the monetary policy to take a limited form. The sanctions imposed so far by the NATO alliance also do not seem to have any severe effects on the economies of Russia and European countries. All this led to a rebound in Bitcoin's price from weekly lows of $ 34,250 to the current level of $ 39,200.

It is worth remembering, however, that the situation remains dynamic and one headline may turn sentiment 180 degrees. The pressure on risky assets may increase by the end of the trading week, which will encourage many investors to execute their positions.

In the report, we decided to provide only information about Bitcoin, because  its price fluctuations still affect the valuations of smaller cryptocurrencies such as Ethereum, Cardano, Stellar or Dogecoin.

Some facts from this week regarding the "king of cryptocurrencies":

• Bitcoin recorded smaller declines compared to other "altcoins." As was the case in the past, smaller cryptocurrencies are still associated with greater investment risk and higher volatility than BTC.
• Bitcoin's downward move which occurred after the Russian aggression in Ukraine was relatively small, on the same day the "king of cryptocurrencies' ' managed to erase all losses and moved to green territory. The level of USD 34,000 remains very strong. According to some investors, this may be a sign that the market is oversold. Many traders believe that the market is strong since the escalation of armed conflict in Europe was not able to push the price below USD 30,000.
• Inflow of Bitcoins to the stock exchanges on February 24, when war began, was relatively small, which means that only some of the existing owners decided to sell their holdings. Data from Glassnode shows that mostly investors which owned 1 BTC or less decided to sell. The overwhelming majority of large investors did not make significant moves that day. Also the number of wallets with more than 1000 BTC increases. Despite rising energy prices and uncertainty on the market, no significant sales from miners were recorded, which is also interpreted as a positive indicator.
• Some speculations emerged regarding activity of Russian oligarchs and institutions affected by sanctions on the cryptocurrency market. 
• The popular 'Entity Adjusted Dormancy Flow' chart shows historically low levels according to Glassnode, which could further encourage long-term investors to consider investing in Bitcoin.
• Ukraine has long wanted to obtain the status of a 'cryptocurrency paradise'. The President of Ukraine, Volodymyr Zelensky, also tried to encourage American companies from the 'Silicon Valley' to move their activities to Ukraine. Zelensky also signed an act with the Ukrainian central bank regarding the issuance of the Ukrainian digital government currency. Unfortunately, the Russian attack ended Kiev's dreams of creating a cryptocurrency-friendly system, at least for the time being.