Bitcoin Resilient as Commodity Prices Inflate, Dollar Strength May Hurt

The sustainability of bitcoin's gains is under question, as the escalating Russia-Ukraine crisis has led to stress in the dollar funding markets.

AccessTimeIconFeb 28, 2022 at 8:54 a.m. UTC
Updated May 11, 2023 at 4:38 p.m. UTC

Bitcoin trades were steady as commodity prices rallied on Monday, hinting at higher inflation ahead. However, the resilience to the escalating Ukraine-Russia crisis may prove fleeting as demand for the U.S. dollar, the global reserve currency and one of the most liquid asset globally, is rising.

  • At 08:23 UTC, the cryptocurrency was changing hands near $38,350, representing a 1.7% gain on the day. Prices fell over 3% on Sunday, providing negative cues to traditional markets.
  • Oil is trading 4% higher on both sides of the Atlantic, extending its recent exponential rally. Russia and Ukraine-linked agricultural commodities like wheat and corn are up 4% and 3%, respectively, according to data from
  • "The range of near-term price outcomes for commodities has become extreme, given the concern of further military escalation, energy sanctions or potential for a cease-fire," Goldman Sachs wrote in a note to clients on Sunday, according to Reuters.
  • The Russian ruble plunged 40% during early Russian trading hours and hit a record low of 118 per U.S. dollar as the Western countries stepped up punitive sanctions on Moscow, intending to isolate the country from the global financial system.
  • The Bank of Russia raised rates from 9.5% to 20% and ordered companies to sell 80% of their foreign currency revenue to counter ruble depreciation risks and higher inflation, according to Reuters.
  • Prospects of higher price pressures and fiat currency crash have strengthened the case for holding assets with a store-of-value appeal, such as bitcoin.
  • The sustainability of bitcoin's gains is under question, as the escalating Russia-Ukraine crisis has led to stress in the dollar funding markets.
  • The gap between the one-month London Interbank Offered Rate (LIBOR) and Fed rates contracts or the so-called FRA/OIS spread, has widened the most since March 2020, according to Bloomberg.
  • The spread measures how expensive or cheap it is for banks to borrow liquidity (dollars) from other banks. A widening spread indicates credit crunch, the likes of which were last seen during the coronavirus-induced crash of March 2020. In such situations, investors usually prefer to hold cash, mainly the U.S. dollar.
  • The dollar index, which tracks the greenback's value against majors, is trading at 97.15 at press time, up 0.66% on the day.


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Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.