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By Omkar Godbole

Bitcoin posted moderate gains early Monday while traditional risk assets tanked on concerns that the West's stricter punitive sanctions on Russia will push the global economy into stagflation – a situation in which an economy experiences a simultaneous increase in price pressures and stagnation in growth.

The top cryptocurrency moved above $38,000, partially erasing Sunday's 3% drop. Meanwhile, Asian and European stocks tanked, and Dow futures fell 800 points before regaining some poise.

The Russian ruble crashed 40% in Moscow, hitting a record low of 118 per U.S. dollar. The greenback gained ground across the board, with the money market showing signs of dollar funding stress.

The leading cryptocurrency remained resilient, perhaps having priced the escalation over the weekend. Crypto markets are open 24/7, contrary to traditional markets, which are available to trade five days a week.

Also read: Ruble-Denominated Bitcoin Volumes Surges to 9-Month High

By Omkar Godbole

The worst-case scenario of high inflation and low growth while central banks prioritize consumer-price stability over economic activity and asset-price stability is increasingly looking likely.

Per James Pethokoukis, a columnist and an economic policy analyst, strategists at Goldman Sachs now expect four additional rates hikes in 2023 in addition to seven rate hikes this year. The investment banking giant previously anticipated three hikes next year.

However, the bitcoin market is showing no signs of panic yet, as evident from the blockchain data and derivatives market activity.

Data provided by blockchain analytics firm Glassnode show that the seven-day average of the number of coins held on centralized exchanges hovers near multi-year lows reached in the final quarter of 2021. That's a sign of solid holding sentiment.

Investors typically move their coins to exchanges when intending to liquidate their holdings.

The put-call skews show demand for put options or downside protection has slightly weakened despite the escalation of the crisis over the weekend. According to data provided by the crypto derivatives research firm Skew, the one-week put-call skew stood at 12% at press time versus 18% on Thursday.

Put-call skews measure the cost of puts or bearish bets relative to calls or bullish bets.

The crypto community doesn't seem worried about prospects of central banks resorting to faster rate hikes to avoid stagflation. Perhaps, investors are anticipating dovish talk from major central banks, given the money markets are exhibiting signs of stress in the dollar funding markets.

Early today, the gap between the one-month London Interbank Offered Rate (LIBOR) and Fed rates for one-month contracts widened the most since March 2020, according to Bloomberg. The widening of the spread represents tighter liquidity for the dollar, the global reserve currency.

Focus on the bitcoin-gold ratio

The bitcoin-gold ratio traded at under the 21-month exponential moving average support of 20.50 at press time. Acceptance under the average may prove costly for bitcoin, as seen in the past.