Ukraine

Bitcoin dips to $36.4K as Ukraine move sends Russian ruble to near 6-year lows vs. dollar

Gold outperforms “digital gold” in the wake of geopolitical strife, analysts note, with XAU/USD passing $1,900.

Bitcoin (BTC) fell to fresh lows on Feb. 22 as the aftermath of Russia’s expected incursion into Ukraine triggered more market woes.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Gold comes to the rescue as Bitcoin wavers

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD reaching $36,400 on Bitstamp overnight Tuesday, its lowest since Feb. 3.

Volatility had been high as Russian President Vladimir Putin delivered a speech lasting almost an hour on the state of the conflict in Ukraine. Putin had ended by recognizing the two breakaway republics in the country’s east, subsequently ordering Russian troops into what is still officially Ukrainian territory.

Stocks and risk assets fell as a result, with Russian companies predictably suffering as nerves over full-scale war escalated.

The Russian ruble fell in tandem, passing the 80-per-dollar mark and encroaching on its record lows of 85.6 from 2016. Sanctions from the West were expected later on the day, likely fuelling further losses.

A surprise winner was gold, which managed to avoid losses to shore up its safe-haven status — unlike Bitcoin.

“Looks like Bitcoin will not be safe haven in geopol crises,” markets commentator Holger Zschaepitz reacted.

“Digital gold (Bitcoin) has plummeted to $1900/oz. Correlation between digital & analog Gold is now even neg. Narrative that digital Gold is better way to escape has not panned out in Ukraine.”

Gold/Bitcoin correlation vs. BTC/USD vs. XAU/USD chart. Source: Holger Zschaepitz/Twitter

Year-to-date, XAU/USD was up over 6% at the time of writing, while BTC/USD traded down 23%.

“It’s actually great to see that Gold is doing really well in these times of heavy uncertainties, crawling upwards, while risk-on assets like stocks and Bitcoin are having a hard time,” Cointelegraph contributor Michaël van de Poppe nonetheless countered.

Zschaepitz added that investments into gold-backed exchange-traded funds, or ETFs, had been increasing throughout February.

Bearish cross looms for on-chain metric

Russia thus took center stage for BTC traders, who on Monday watched gloomily as storm clouds gathered over Asian markets.

Related: ‘Coin days destroyed’ spike hinting at BTC price bottom? 5 things to watch in Bitcoin this week

A tech stock rout on the back of a fresh regulatory crackdown from China had sparked two days of considerable downside for some of the biggest equity bets, including Tencent.

“$39.6k is now the new key resistance the Bitcoin bulls must get back above,” popular analyst Matthew Hyland said Tuesday.

He added that moving average convergence/divergence on the three-day chart was now primed to print a bearish crossover, in direct contrast to previous hopes that a bullish breakout could precede fresh BTC price strength.

Sentiment also took a hit from the latest events, with the Crypto Fear & Greed Index down to 20/100 — well within the “extreme fear” bracket.

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

Bitcoin bulls scramble to defend $40,000 as the crypto market sell-off intensifies

BTC and altcoins were hit by another round of selling as analysts say a worsening macroeconomic climate threatens to push Bitcoin price below $40,000.

Bitcoin (BTC) and altcoins dropped further on Feb. 17 after the situation in Ukraine worsened and Russia expelled Bart Gorman, the United States Deputy Chief of Diplomatic Mission, from the country after President Biden reiterated that the threat of a Ukraine invasion by Russia was “very high.” 

Data from Cointelegraph Markets Pro and TradingView shows that the afternoon resurgence in sell-side pressure dropped the price of Bitcoin to a daily low at $40,081 as bulls frantically regroup and attempt to prevent a slide below $40,000.

BTC/USDT 4-hour chart. Source: TradingView

According to analysts, the bullish case for a move higher continues to dwindle as the factors weighing on the crypto market mount.

Real rates and inflation are the main issues

The effect of the Ukraine-Russia situation was touched upon by David Lifchitz, managing partner and chief investment officer at ExoAlpha, who noted that the situation “is definitely weighing on risk assets, up like Feb. 15, down like today.”

While the Ukraine-Russia saga is currently dominating news headlines and causing widespread weakness across global markets, Lifchitz suggested that the situation “looks like a distraction from the real rates/inflation issue.”

According to Lifchitz, this current conflict may only last a few months while “the inflation/rates issue is a multi-year issue that can hit much more, on a broader scale, and for a longer time.”

Lifchitz said,

“Bitcoin is just pulling back into its $30,000 to $50,000 range for now as we remain in a traders’ market. So unless there’s a significant break below $33,000 or above $48,000, the swing trading will continue and altcoins will follow the move, with just more amplitude.”

Related: Bitcoin traders say $40K is the ‘line in the sand’ after BTC and stocks sell-off

Bitcoin remains a strong asset

Despite the recent weakness, market analyst and pseudonymous Twitter trader ‘IncomeSharks’ offered the following words of comfort to help add a little perspective to the long term outlook for BTC.

The overall cryptocurrency market cap now stands at $1.85 trillion and Bitcoin’s dominance rate is 41.7%.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Ukraine’s updated crypto bill kicks one ministry out as regulator

Ukraine’s crypto bill was previously returned for revision due to the creation of a new regulatory body for crypto oversight.

Ukraine’s parliament, the Verkhovna Rada, has approved some significant amendments in the country’s major cryptocurrency-related legislation known as the bill “On Virtual Assets.”

The Ukrainian Rada passed the legislation in the second reading during a plenary session on Thursday, with 272 out of 365 deputies supporting the bill.

The deputies specifically approved several bill recommendations by Ukraine’s President Volodymyr Zelensky, removing the country’s Ministry of Digital Transformation from the list of authorities overseeing the cryptocurrency market.

As such, the updated version of the bill establishes The National Securities and Stock Market Commission of Ukraine, or NSSMC, and the National Bank of Ukraine, or NBU, as two major regulators on the crypto market.

The NBU is specifically assigned to oversee the turnover of virtual assets backed by currency valuables. The NSSMC is set to supervise other types of digital assets, including derivative financial instruments as well as regulate virtual asset service providers.

Alex Bornyakov, deputy minister of Ukraine’s Ministry of Digital Transformation, told Cointelegraph that the ministry welcomes the latest changes in the country’s crypto law.

“Shrinking regulatory bodies can actually significantly accelerate crypto market launch. In order to ensure the growth of the crypto industry we are ready to cooperate with The National Commission on Securities and Stock Market. Ultimately, real change in any market is driven by collaboration.”

According to Konstantin Yarmolenko, head of advisors at parliamentary group Blockchain4Ukraine, Zelensky is expected to sign and publish the law within the next 10 days. Local lawmakers are also expected to register a bill on amendments to Ukraine’s tax code to regulate “all issues related to taxation of cryptocurrencies and other virtual assets.”

As previously reported by Cointelegraph, Ukraine’s bill “On Virtual Assets” was introduced back in May 2020, with a mission to determine the legal status of cryptocurrencies like Bitcoin (BTC). After several readings, the Ukrainian president returned the bill to parliament for revision due to the expensiveness of setting up a new regulatory body for digital asset oversight.

Established in August 2019, the Ministry of Digital Transformation is known for collaborating with some of the crypto industry’s most prominent players, including Binance, the world’s largest crypto exchange.

Related: Crypto payment card ‘top priority’ for Binance Ukraine in 2022

The news comes amid the ongoing tensions between Ukraine and Russia, with reports alleging that Russia was adding troops to the Ukraine border despite claims it would withdraw some forces. Amid the ongoing crisis, Russia is also working hard on crypto regulation, with the government planning to release draft industry regulations on Friday.

‘Up only’ for BTC fundamentals — 5 things to watch in Bitcoin this week

Record hash rate and difficulty provide a positive overture to some uninspiring price moves, with Bitcoin now offering network security never seen before in its history.

Bitcoin (BTC) starts the week with a slow drag downhill toward pivotal support at $40,000.

After bulls had something to celebrate last week, the current environment looks like a fresh dose of reality as BTC battles nervous stock markets, a resurgent United States dollar and more.

The picture is, as always, mixed — while spot price may not look too impressive, under the hood, Bitcoin is stronger than ever, and network participants are doubling down on their long-term commitments.

Add to that the slow decline of risky behavior on derivatives markets and the stage could be set for some sustainable price growth. Will it happen this week?

Cointelegraph presents five factors to consider in the coming days for BTC/USD.

Bitcoin tests new 50-day moving average support

After 10 days of recovery, Bitcoin is now reckoning with the resistance levels, which have bee absent from bulls’ radar since the middle of January.

Having passed $45,500 late last week, the weekend saw relatively calm conditions as the daily chart nonetheless saw a series of lower lows.

The weekly close, the topic of interest Sunday as price action stayed practically in an identical place to the end of last week, ultimately disappointed — BTC/USD set a lower close of just under $42,000.

With that, however, comes the possibility of short-term upside to fill the CME futures “gap” now above spot price at near $42,400.

“Bitcoin is still just sitting in between support and resistance,” popular commentator Matthew Hyland summarized Monday, adding that he was “relaxing” in the face of current price moves.

With support and resistance levels close by, trader and analyst Rekt Capital, meanwhile, reiterated BTC’s relative weakness when it comes to reclaiming support levels on a macro scale.

Previously, he had identified two moving averages that needed to be reconfirmed as support in order for Bitcoin to have a shot at its all-time high from November.

Closer to home, the 50-day moving average is being challenged as the new week begins after a week of action above, data from Cointelegraph Markets Pro and TradingView shows.

BTC/USD 1-day candle chart (Bitstamp) with 50-day MA. Source: TradingView

DXY sours risk asset mood

Bitcoin’s reversal toward $40,000 may not be helped by an advancing U.S. dollar.

Since Feb. 4, the U.S. dollar currency index (DXY) has been on the rebound, canceling a steep downtrend that had characterized the week prior.

That traditionally spells problems for risk assets, and as of Monday, DXY was trading back above the 96 mark.

U.S. dollar currency index (DXY) 1-day candle chart. Source: TradingView

For stocks, already uninspired by the potential for U.S. Federal Reserve rate hikes in March, the geopolitical situation involving Ukraine and Russia remains a factor providing nervousness this week.

“Over the past century, there were only four years where both stocks and bonds had a negative year,” analyst Lyn Alden noted.

“Obviously it is super early, but so far both stocks and bonds have had negative returns in 2022.”

Oil, meanwhile, continued on its journey to the $100 mark on the same tensions, Brent Crude futures passing $96 a barrel Monday.

As Cointelegraph reported, both oil and Bitcoin remain a macro pick for this year.

Spot price starts leading futures

Amid the rise to and the comedown from local highs, interesting activity has been taking place on Bitcoin derivatives markets.

As noted by Twitter monitors, including Glassnode lead analyst Checkmate, open interest leverage has been disappearing from futures markets — and with it, the risk of getting deleveraged or “liquidated.”

This time, however, the reduction is not coming from a sweeping change in price knocking out positions. Instead, investors themselves are choosing to change their strategy.

“Bitcoin futures leverage has fallen significantly this week, falling from 2.0% of Market cap, to 1.75%,” Checkmate tweeted Sunday alongside a chart showing the de-risking.

“However, this was NOT the liquidation cascade we all know and love. This is from traders choosing to close out their positions, far healthier. I expect spot to lead now.”

Bitcoin futures open interest leverage ratio vs. BTC/USD annotated chart. Source: Checkmate/Twitter

Regarding the relationship between spot and futures prices, fellow commentator Byzantine General added that there is now the potential for futures to begin trading below, rather than above spot price.

The divergence between the futures basis and spot is already “pretty significant,” he added in his own post overnight.

At the time of writing, CME futures were trading around $200 below the spot price at exactly $42,000.

Hash rate follows difficulty to all-time highs

It’s been a straight winning year for Bitcoin’s network fundamentals so far, and this week is no exception.

Over the weekend, hash rate charts — an estimate of the processing power dedicated to mining — surged to new all-time highs.

While knowing the exact level of hashing power active on the Bitcoin network is impossible, hash rate estimates have shown a clear uptrend since the middle of last year, and the ecosystem took a matter of months to fully cancel out the impact of China’s enforced miner migration.

Now, with the U.S. taking center stage for mining, it appears that it is a race to the top for participants.

More easily measurable is Bitcoin’s mining difficulty, which has also recovered fully after diving to take into account the reduced hashing activity post-China.

As of Monday, difficulty stood at 26.69 trillion, but moreover, its next automated adjustment will send it even higher still — over 27 trillion for the first time.

The adjustment will kick in in around three days and represent approximately a 2.2% increase.

Bitcoin difficulty chart. Source: Blockchain.com

Keep on hodlin’

There is a firm sense of conviction among Bitcoin hodlers, and while this is common knowledge, the extent of their resolve is becoming clearer than ever.

Related: Top 5 cryptocurrencies to watch this week: BTC, XRP, CRO, FTT, THETA

As noted by the popular Twitter account known as PlanC, wallets thought to belong to long-term hodlers are increasing dramatically — and recent price action has only helped the trend.

Citing Glassnode data, PlanC noted that those entities, defined as wallets with a least two significant incoming transactions and zero outgoing transactions, have now hit an almost five-year high.

The last days of January appear to have been particularly attractive to those seeking a position as BTC/USD returned to $40,000 after a two-week absence.

The data excludes exchange addresses and those over seven years old to reduce the likelihood of the target wallets containing “lost” BTC that the owner is no longer able to access.

Crypto payment card ‘top priority’ for Binance Ukraine in 2022

A Ukrainian official previously said that local laws do not prohibit people from paying in crypto if it’s converted into fiat.

Major cryptocurrency exchange Binance continues pushing operations in Ukraine by preparing to launch a new crypto payment card in the country.

Binance is looking to reach a dominant position in the crypto market of Ukraine by offering a wide range of local crypto services, Binance Ukraine’s new general manager Kirill Khomyakov said in a Monday interview with Forbes Ukraine.

“Binance card is not yet available for Ukrainian users, but we are actively working on its launch. This is one of our top priorities for 2022,” Khomyakov told Cointelegraph.

Apart from launching a crypto payment card, Binance Ukraine is also pursuing the active development of local services related to nonfungible tokens (NFTs) and fan tokens. The firm is planning to launch a fan token for a major sports team in Ukraine to enable nefan interactions soon, Khomyakov said.

While Ukraine’s crypto legislation doesn’t allow straightforward payments in cryptocurrencies like Bitcoin (BTC) as these assets are not recognized as legal tender, there is still no ban on crypto-derived transactions.

“Binance card has a balance in cryptocurrencies with no fiat balance required. At the moment of the transaction the amount of the transaction is automatically converted from crypto to fiat,” Khomyakov said. “Our local partners ensure that any co-branded products with Binance are provided in 100% compliance with all regulatory rules and requirements,” he added

Some Ukrainian government officials like Digital Transformation Deputy Minister Oleksandr Bornyakov also previously pointed out that local laws do not prohibit payments derived from crypto if crypto payment assets are converted into fiat.

Related: Reuters: Binance was withholding information from regulators, repeatedly shunned own compliance department

Some countries like Russia have even banned crypto payments, but this didn’t prevent state-backed institutions like the State Hermitage Museum from accepting crypto-derived payments during an online NFT auction supported by Binance.

Binance had previously planned to launch its crypto payment card in Russia despite the local crypto payment ban. After it announced the plan in 2020, Binance has not yet rolled out the product.

“At the moment, the launch of the card in Russia is not a priority,” Binance Eastern European director Gleb Kostarev told Cointelegraph, adding that the firm is now focused on developing a “regulatory field around cryptocurrencies.”

Binance taps former central bank exec to push compliance in CIS and Russia

Binance makes another major strategic move in one of the world’s biggest cryptocurrency miner regions.

Binance, the world’s largest cryptocurrency exchange, is putting more effort into increasing compliance in the Commonwealth of Independent States (CIS), Russia and Ukraine.

Binance is planning to extend its operations in the region and boost local cryptocurrency compliance and education, Gleb Kostarev, head of operations for Russia and the CIS at Binance, told Cointelegraph on Tuesday. The company additionally expects to focus on the local Binance Smart Chain development and community, he noted.

As part of the effort, Binance announced several local hires, including Olga Goncharova, Binance’s new director of government relations in Russia and the CIS.

Goncharova previously served at the Bank of Russia as director of the bank’s report processing department from 2014. She was responsible for processing financial statements from companies under the central bank’s supervision, also leading several Bank of Russia’s projects related to fintech and digital transformation.

“Binance places a great emphasis on regulation and compliance in jurisdictions of operation. Binance’s unique community, cutting-edge technology and innovative approach to work give Binance great opportunities for further development,” Goncharova said.

Vladimir Smerkis, co-founder of cryptocurrency platform Tokenbox, has also joined Binance as director of Binance Russia. Other new regional hires include former BNP Paribas executive Kirill Khomyakov, who will act as general manager of Binance Ukraine.

“With a proven track record, the new executives will certainly have a positive impact on Binance’s growing presence in Russia, Ukraine and Eastern Europe,” Kostarev said.

Related: Bank of Russia to allow crypto investment via foreign firms

The latest news marks a significant strategic move by Binance as the region has been increasingly emerging as one of the world’s biggest crypto spots and mining centers.

Kazakhstan, a major CIS member state, is the second-biggest Bitcoin (BTC) mining country after the United States, responsible for 18% of the total Bitcoin hash rate as of October 2021. Trailing Kazakhstan, Russia produces 11% of the entire global BTC mining hash rate and is the third-largest visitor of Binance’s website, according to data from SimilarWeb.

Ukrainian bank uses Stellar to launch electronic hryvnia pilot

Ukraine’s Ministry of Digital Transformation supports a Stellar-based private stablecoin project developed by a local bank.

Tascombank, one of the oldest commercial banks in Ukraine, is launching a Stellar-based pilot for Ukraine’s national fiat currency, the hryvnia.

The Stellar Development Foundation (SDF) announced on Tuesday a private electronic hryvnia pilot launched by Tascombank and fintech company Bitt.

The electronic hryvnia pilot is being implemented under the supervision of the National Bank of Ukraine and is supported by the Ministry of Digital Transformation (MDT).

Oleksandr Bornyakov, deputy minister of the MDT, said that the pilot project will provide a “technological basis for the issuance of electronic money” and is the “next key step to advance innovation of payment and financial infrastructure in Ukraine.”

SDF CEO Denelle Dixon told Cointelegraph that the pilot work has already kicked off, with the first test including programmable payroll for public employees at Diia, a public IT solutions enterprise owned and supported by the MDT of Ukraine.

“This regulated electronic hryvnia will be privately issued e-money on blockchain technology, built under Ukraine’s current e-money legislation,” Dixon noted.

The purpose of the initiative is to test the issuance of electronic money on an open blockchain. Tascombank is responsible for building and testing the electronic hryvnia on Stellar to deploy it on Bitt’s transaction network known as Digital Currency Management System, or DCMS.

“Bitt’s DCMS will equip Tascombank with all of the technology required to securely mint, store, issue, distribute, and redeem the electronic hryvnia,” Bitt CEO Brian Popelka said.

While Bitt is providing a transaction network, SDF will help Tascombank “configure for their asset control needs while maintaining the interoperability and flexibility of an open ledger,” Dixon noted.

Related: Ukrainian president returns virtual asset bill to parliament for revision

The Ukrainian government has been actively exploring Stellar for digital currency implementations. In January 2021, the MDT first partnered with the SDF to develop a digital asset and infrastructure strategy for a central bank digital currency.

“We continue to provide input and guidance to MDT on their strategy work,” Dixon stated, adding that the electronic hryvnia pilot project is a separate workstream.

Ukrainian president returns virtual asset bill to parliament for revision

Volodymyr Zelensky did not object to the bill’s fundamental principles, but opposed the idea of creating a new watchdog agency.

Volodymyr Zelensky, president of Ukraine, has delayed signing a bill that would establish the nation’s regulatory framework around digital assets. The draft law, entitled “On virtual assets,” secured parliamentary approval on Sept. 8. However, according to an Oct. 5 statement issued by the presidential office, Zelensky remitted the legislation back to the parliament alongside a number of proposed improvements.

As per the statement, the president’s major objection to the legislation in its current shape is the costliness of establishing a new regulatory body for digital asset oversight:

According to the legislation, regulation of the virtual assets market is to be carried out by various state bodies depending on the type of such assets, particularly by creating a new executive body. The creation of a new body, as provided by this law, will require significant expenditures from the state budget.

In lieu of creating a separate executive agency focused on digital assets, Zelensky proposes to place them under the purview of the existing National Commission on Securities and Stock Market, a watchdog agency that is, according to its charter, “subordinated to the President of Ukraine and accountable to the Verkhovna Rada,” the nation’s parliament.

The development appears to reflect the Ukrainian authorities’ pragmatic search for the most practicable implementation of a digital asset regulatory regime rather than a reversal of the nation’s forward-looking stance on crypto.

Ukraine’s central bank seeks to hire a blockchain developer, job posting reveals

The development marks another sign of the digital hryvnia project picking up steam.

The National Bank of Ukraine, the country’s chief monetary authority, has recently taken to professional social network LinkedIn to promote its blockchain developer job opening. The ad was published by the director of NBU’s IT department, Vladimir Nagornyuk.

The ad goes on to list “development, implementation and modification of infrastructure services […] and distributed systems” among the prospective employee’s duties, in addition to mentioning smart contracts and Hyperledger competencies among the requirements for the job.

The central bank’s interest in blockchain hires adds to other recent news coming out of Ukraine’s CBDC project, the e-hryvnia. Last week, speaking at a round table discussion on the opportunities and risks of virtual assets’ legalization, Ukraine’s deputy minister of digital transformation Oleksandr Bornyakov mentioned that the e-hryvnia pilot was underway.

NBU has been considering the possibility of issuing a central bank digital currency, or CBDC, since 2016, while pilot testing of the e-hryvnia as a means of blockchain-based retail payments began two years later, in 2018. The work may have accelerated following the recent adoption of legislation designed to establish a transparent regulatory framework for digital assets and spur the development of the nation’s crypto industry.

Central bank of Ukraine to promote ‘fair’ Bitcoin regulation

Crypto doesn’t pose a big risk for the financial system until it’s adopted enough to be less volatile, the NBU said.

The central bank of Ukraine has moved to support the development of the cryptocurrency industry after the Ukrainian parliament adopted a major crypto law in early September.

The National Bank of Ukraine (NBU) issued an official statement on the basic principles of monetary policies for the upcoming year in which it paid particular attention to the regulation of cryptocurrencies on Sept. 13.

The central bank emphasized that the NBU recognizes the importance of technological innovations associated with virtual assets and sees “many promising opportunities,” like improving access to financial services and increasing competition in the payments market.

According to the NBU, cryptocurrencies like Bitcoin (BTC) have not had a significant impact on the Ukrainian monetary policy and financial stability due to its current “relatively limited” adoption level and high price volatility.

However, as the bank is confident that further adoption growth would eventually make cryptocurrencies less volatile, the NBU will be taking certain measures to ensure financial stability. As such, the NBU will “pay proper attention” to monitor the risks of the rapid adoption of crypto, particularly focusing on private stablecoins, a type of cryptocurrency pegged to an underlying asset like a fiat currency or a precious metal.

According to the bank, cryptocurrencies ultimately pose a potential risk of replacing the national currency and the “emergence of parallel money circulation” outside the control of the NBU. Other risks include foreign capital outflows, money laundering concerns, as well as “displacing traditional banking” as a whole.

In order to minimize these risks, the NBU will work to ensure that the Ukrainian hryvnia is the only legal tender in Ukraine, the authority said, adding that the central bank will still be committed to promoting crypto at the same time, stating:

“The National Bank will make efforts to build a system providing transparent and understandable state regulation that will promote the development of fair and efficient circulation of virtual assets.”

Related: Ukrainian ministry considering digital currency pilot for staff salaries

The NBU also noted that it would continue to study the international experience of developing a central bank digital currency (CBDC). As previously reported, Ukrainian President Volodymyr Zelenskyy signed a law that officially enabled the NBU to issue a CBDC in July 2021.

The news comes after the Verkhovna Rada of Ukraine adopted the draft bill “On Virtual Assets” on Sept. 8, granting legal recognition to cryptocurrencies like Bitcoin. Despite not recognizing Bitcoin as legal tender, the legislation still allows crypto-based payments through converting crypto assets into fiat, according to some government officials.