Market Wrap: Bitcoin Rangebound as Traders Hedge Risks

Bitcoin (BTC) traded in a tight range on Monday as Russia-Ukraine tensions continued to weigh on markets. Meanwhile, crypto traders are hedging against downside risk and reducing leverage.Read MoreFeedzy

Traders continue to monitor the conflict between Russia and Ukraine on Monday, which has weighed on equities and cryptocurrencies.

The U.S. announced it will temporarily relocate its embassy operations in Ukraine from Kyiv to Lviv, farther away from the Russian border, due to the “dramatic acceleration in the buildup of Russian forces.” And Ukrainian President Volodymyr Zalenskyy said Wednesday – two days from now – will be the “day of the attack,” in a speech on Monday.

“This fear is due to the uncertainty of war but also the fact that U.S. President Joe Biden has said he will shut down the Nord Stream 2 pipeline if Russia decides to invade,” Marcus Sotiriou, an analyst at the U.K.-based digital asset broker GlobalBlock, wrote in an email to CoinDesk.

Nord Stream 2 provides a significant portion of Europe’s natural gas, so a shutdown could cause oil prices to climb, which could result in higher inflation, according to Sotiriou. Central banks are tightening monetary policy to combat rising prices, which is a headwind for speculative assets such as cryptocurrencies.

Bitcoin (BTC) traded in a tight range between $41,000 and $42,000, while oil, gold and the U.S. dollar traded higher over the past 24 hours.

?Bitcoin (BTC): $42228, -0.61%

?Ether (ETH): $2900, -0.32%

?S&P 500 daily close: $4402, -0.38%

?Gold: $1873 per troy ounce, +1.76%

?Ten-year Treasury yield daily close: 2.00%

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.

The bitcoin futures term structure, which reflects the market expectation on future implied volatility, has flattened through March. That could reflect uncertainty among crypto derivative traders.

Through the end of 2022, the term structure shows a very modest 6% annualized premium, “suggesting the market is quite far from anticipating a wild bullish impulse any time soon,” Glassnode stated in a blog post on Monday. Further, “the market appears to be de-risking and curtailing leverage in response to the plethora of macro uncertainties.”

The chart below shows the recent increase in put options relative to call options, indicating greater demand for downside protection among bitcoin traders.

Bitcoin put option dominance (Glassnode)

Ethereum funds saw their first inflows in 10 weeks, at $21 million. Meanwhile, bitcoin funds saw inflows of $25 million last week, a slower pace of growth compared with the $71 million of inflows the week before.

The inflows remain relatively minor in comparison to the inflows during the fourth quarter of 2021, according to CoinShares.

The firm noted that there were regional differences in the week’s data, with $5.5 million of outflows in the Americas and $80.7 million of inflows into European investment products.

US$75 million flew into digital-asset funds last week as ether funds saw first inflows in 10 weeks. (CoinShares)

DARMA Capital unveils CFTC-regulated filecoin swap product: Crypto investment firm DARMA Capital has created the first financial derivative based on a decentralized storage protocol: the Filecoin Asset Use Swap, or FAUS. DARMA (Digital Asset Risk Management Advisors) is making $100 million worth of its filecoin (FIL) holdings available to be loaned out, removing the need for users to buy the token to participate in the network, and allowing more storage providers to earn returns through the system’s proof-of-stake mechanism, according to CoinDesk’s Ian Allison. Read more here.

Animoca brands and Brinc launch $30M guild program for play-to-earn ecosystems: Animoca Brands, an investor in non-fungible token (NFT) and metaverse projects, is partnering with global venture accelerator Brinc to launch the Guild Accelerator Program. Under the leadership of Animoca’s Richard Robinson, the program will fund up to $500,000 per guild. Among priorities for acceptance will be projects with a focus on sustainability and those that support and give back to player/scholar communities, according to CoinDesk’s Lyllah Ledesma. Read more here.

Tollan Worlds to build the first play-to-earn metaverse on Fuse: Multichain metaverse project Tollan Worlds received a grant from FuseDAO to implement its platform on the Fuse Network blockchain. Fuse will also have a dedicated hub in the Tollan multi-chain metaverse. Read more here.

Digital assets in the CoinDesk 20 ended the day lower.

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.

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