Market Wrap: Bitcoin Stabilizes Amid Geopolitical Uncertainty

Bitcoin (BTC) and other cryptocurrencies experienced sharp price swings over the past 24 hours amid Russia's invasion of Ukraine.

On Thursday, U.S. President Biden imposed additional sanctions on Russia for the attack. Russian airstrikes triggered declines across speculative assets worldwide, including cryptocurrencies.

The market capitalization across all cryptos slid toward $1.5 trillion, losing almost 9%. Bitcoin fell as much as 7%, although the crypto pared earlier losses and had returned above $38,000 at press time. Most alternative cryptocurrencies underperformed bitcoin over the past 24 hours.

"Option volumes point to the likelihood that many investors are maintaining long positions while hedging risk with derivatives," Sean Farrell, head of digital asset strategy at FundStrat, wrote in a email on Thursday.

"Consistent with last week, we think it is wise to maintain long positions with time horizons beyond six months and be prepared to buy on dips," Farrell wrote.

Bitcoin's trading volume across major spot exchanges reached its highest level in a month, according to CoinDesk data. Typically, high volume corrections could signal capitulation among sellers.

And from a technical perspective, there are initial signs on the charts of downside exhaustion, which typically precede short-term upswings in price.

Katie Stockton, managing partner at Fairlead Strategies, a technical research firm, also noticed a short-term counter trend signal for BTC. "Hopefully this allows bitcoin to avoid a confirmed breakdown," Katie wrote in an email to CoinDesk.

A break below $37,361 would be bearish, although Stockton's work shows the current dip in BTC could exhaust itself today and give way to two weeks of stabilization.

Risk-off has been the dominant theme so far this year, even before the events in Russia and Ukraine escalated into a full-scale war.

The chart below shows that long-term U.S. Treasurys have moved in lockstep with stocks, offering little protection for investors. Meanwhile, bitcoin have largely underperformed traditional assets year to date. And gold has maintained its status as a safe haven asset.

Still, returns across assets have narrowed, with bitcoin still in the lead over the past year.

Digital assets in the CoinDesk 20 ended the day slightly 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.