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Crypto Market Forecast: Week of March 7th 2022

A curated weekly summary of forward-focused crypto news that matters. This week, volatility reigns as the price of BTC bounces between US$45,000 and US$38,000. Bitcoin finds utility in Russia as the ruble collapses in value, and an upcoming Fed interest rate hike appears to be spooking investors.

Another see-saw week in the crypto markets ended with a steep drop that left the price of Bitcoin (BTC) up just ~4% for the week after a strong start saw BTC jump 15% in 12 hours. In the last seven days Ethereum (ETH), and Binance-coin (BNB), the 2nd and 3rd largest assets on the Brave New Coin market cap table, are up ~1% and ~5%.

The price of BTC jumped by nearly 20% on Monday to US$45,000, a 3-week high. The uptick was driven by speculation that financial sanctions and a dropping ruble would drive Russians towards cryptocurrencies.

The speculation that BTC and other digital assets would succeed in this environment was not unfounded. On Tuesday, ruble-denominated BTC volumes hit a new all-time high in Russia. This spike happened after the EU, Japan, the United States, and the UK decided to disconnect numerous major Russian banks from the SWIFT interbank messaging service. SWIFT is used to facilitate most of the world’s commercial cross-border payments between banks in different countries.

Parallel to the price of BTC rising in Russia, the ruble has collapsed in value against the US dollar. At the start of February, 1 US dollar was worth ~77 RUB, now, 1 US dollar is worth ~124 RUB. This constitutes a ~61% fall in value and a severe loss in the purchasing power of Russian citizens.

It is unsurprising that many Russians have turned to BTC as a haven during the current geopolitical storm. Bitcoin was created as an alternative for global citizens failed by their governments, central banks, and private banks. It has a decentralized, permissionless, and censorship-resistant architecture which means it can almost always be used irrespective of the global political environment.

The situation in Russia and its fiat currency is helping to illustrate the utility and inherent value of bitcoin. BTC is likely being used by both the ultra-wealthy and regular people in Russia to sidestep banking sanctions and to shield against a weak local currency.

The excitement over BTC’s utility in Russia faded in the second half of last week. The Bitcoin price dropped from trading near US$45,000 on Tuesday to trading close to US$38,000 by Sunday. The drop shows the volatility of digital assets and the fickle nature of its investors.

A potential driver of this drop may have been statements made in the last week by Fed chairman Jerome Powell. Powell said that despite concerns over the impact of the Russia-Ukraine war, a hawkish turn by the Fed and an interest rate hike would be coming later this month. Powell was also encouraged to maintain this position because of strong job market data that showed 678,000 jobs were added to the US in February. Much higher than the expected 400,000. A higher interest rate would make capital more expensive for investors making it more challenging for them to invest in perceived risk assets like BTC.

Crypto news for the week ahead

7th March –Terra’s Prism farm launches

This Monday, a new opportunity for Terra (LUNA) investors to earn further yields on their holdings opens up. The Prism Farm will let users stake yLUNA (a yield-bearing version of LUNA) and receive PRISM tokens in exchange for yLUNA yields. yLUNA holders who decided to take up the offer will hope the newly released PRISM token rises in value as many other defi protocol tokens have in the past.

14th March – Verge halving

Verge (XVG) is a privacy-oriented project that was originally known as DogecoinDark. This Tuesday the network executes a block reward halving that will reduce the number of XVG offered to miners as a block reward from 50 to 25. A halving is often expected to lead to higher prices because they tighten supply, drive scarcity and reduce miner selling pressure. The price of XVG has dropped by ~4.2% in the last week.

Top 10 Crypto Summary

Marcap 1-min

It was a volatile, choppy week of trading for most large-cap assets in crypto apart from a few standouts. LUNA, the native token of the Terra network, appears to have decoupled from the rest of the market, continuing to rise despite the slump across the rest of the market. A key factor in LUNA’s rise is the amount of LUNA that is burnt as the demand for the US Dollar-Terra (UST) stablecoin rises. LUNA is burnt to ensure UST maintains its peg when demand for it is high.

Bitcoin Price Chart

BlX --min

Despite Bitcoin’s recent period of choppy trading and volatility, institutions are still buying into the asset aggressively. Data provider Glassnode reports that investment firms like Ark, Morgan Stanley, and Rothschild Investment Corp have been buying into Bitcoin investment vehicles like GBTC heavily. These institutions are presently more of a factor in buy-side pressure than retail which is currently feeling the pain of high inflation and flat wages which affects their ability to invest.


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