First Mover Asia: China to Widen Test of Digital Yuan as Russia Invasion Spotlights Crypto’s Potential Role; Cryptos Decline

The country is close to approving trials of the central bank digital currency in a number of cities and regions; bitcoin and ether drop as risk-on appetite fades.

AccessTimeIconMar 3, 2022 at 11:48 p.m. UTC
Updated Apr 10, 2024 at 2:20 a.m. UTC

Good morning. Here’s what’s happening:

Prices: Bitcoin and other major cryptos decline as Russia escalates its attack.

Technician's take: Intraday charts show downside exhaustion, which could encourage short-term BTC buying.

Catch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analysis.

And sign up for First Mover, our daily newsletter putting the latest moves in crypto markets in context.


Bitcoin (BTC): $42,528 -3.2%

Ether (ETH): $2,839 -3.8%

Top Gainers

Asset Ticker Returns Sector
Cosmos ATOM +4.8% Smart Contract Platform
Internet Computer ICP +3.0% Computing
Ethereum Classic ETC +2.2% Smart Contract Platform

Top Losers

Asset Ticker Returns Sector
Solana SOL −5.3% Smart Contract Platform
Ethereum ETH −4.1% Smart Contract Platform
Cardano ADA −3.7% Smart Contract Platform

Bitcoin and other major cryptos declined on a dark Thursday in Ukraine.

At the time of publication, bitcoin was trading at about $42,500, down more than 3% over the previous 24 hours. Ether, the second-largest cryptocurrency by market capitalization, was changing hands at about $2,800, down roughly 4% over the same period. Most other cryptos in the CoinDesk top 20 by market cap were in the red.

Russian forces captured Kherson, a port city of about 300,000 in the southern part of Ukraine and a shipbuilding hub, and continued to grab huge swathes of the region with its access to the Black Sea. Rocket fire and cluster bombs barraged Ukraine's largest cities, and more than one million people have fled the now war-torn country, including foreign students and workers from Asia.

Meanwhile, the Biden administration requested $10 billion in humanitarian and defense aid for Ukraine nd imposed new sanctions on Russia as crypto and other donations poured into Ukraine. The attack on a sovereign country has put a spotlight on crypto's potential as a way to conduct transactions outside of traditional financial services networks.

Earlier this week, investors viewed this development optimistically. But momentum has faded as investors shied away from riskier assets over the past two days.

"Bitcoin’s rally is starting to show signs of exhaustion," wrote Oanda senior market analyst Edward Moya in an email. "Bitcoin needs risk appetite to be healthy for prices to make a run above the $50,000 level, so it should come as no surprise if prices consolidate around the $40,000 level."


S&P 500: 4,363 -0.5%

DJIA: 33,794 -0.2%

Nasdaq: 13,537 -1.5%

Gold: $1,936 +0.4%


China Ratchets Up Testing of Digital Yuan; India to Tweak Definition of Crypto

An expansionist China, arguably an even greater challenger than Russia to the U.S-led rules-based order, “will soon approve a third batch of localities set to launch trials of its digital yuan currency,” according to Reuters, which cited state-backed financial outlet Securities Times. The report says that “a number of cities and regions have applied to authorities for permission to test the digital yuan,” including the cities of Guangzhou, Chongqing, Fuzhou and Xiamen.

Meanwhile, according to a report in the South China Morning Post, analysts said that "Western sanctions imposed on Russia following the invasion of Ukraine, including exclusion from the SWIFT financial messaging system, could offer new development opportunities for China’s digital currency and its home-grown yuan cross-border payment system."

One analyst wrote, “It is necessary and urgent to vigorously promote yuan internationalization, especially the development of the CIPS system (Cross-Border Interbank Payment System set up to boost international use of China’s currency in trade settlements) and the digital yuan.”

China’s crypto narrative, though, appears to be focused on its central bank digital currency, or e-yuan. A note by the Financial Stability Bureau of the Chinese central bank revealed that China’s share in bitcoin transactions has declined 80 percentage points after the government's crackdown.

“The global share of Bitcoin transactions in China has dropped rapidly from more than 90% to 10%," the note said.

China’s crypto narrative appears to be accelerating again just as Ukraine generated a high level of crypto adoption excitement by announcing an airdrop for donations, a first by a country. It had to be canceled after it became apparent that a third party may have been spoofing the much-anticipated event.

Instead, Ukraine will announce NFTs (non-fungible tokens) to support Ukrainian Armed Forces soon, according to Mykhailo Fedorov, Ukraine's minister of digital transformation.


India, the world’s largest democracy, may make its tax policy clearer by tweaking the definition of crypto or virtual digital assets. According to a report by CNBC TV-18, the Indian government is likely to tweak the definition to clarify that only cryptocurrencies, crypto tokens, NFTs and vouchers fall under the definition of virtual digital assets, but not other categories such as Demat shares, credit card points, frequent flier points, e-vouchers, cash bank points, etc. The government will also include a detailed FAQ to explain the definition, according to the report.


And while the world has its eyes on the U.S. Federal Reserve and its plans to combat inflation, the debate around how inflation will affect cryptocurrencies remains active.

Adding to the conversation, Bill Gross, the "bond king" who co-founded the Pacific Investment Management Co. (PIMCO), said he sees the possibility of stagflation and he wouldn't buy stocks aggressively now, according to CNBC.

However, Kathy Bostjancic, chief U.S. economist at Oxford Economics, told CNBC “we are not in stagflation yet.”

Stagflation takes place when stagnant economic growth, high unemployment and high inflation occur concurrently.

Technician's take

Bitcoin's daily chart shows support/resistance levels. (Damanick Dantes/CoinDesk, TradingView)
Bitcoin's daily chart shows support/resistance levels. (Damanick Dantes/CoinDesk, TradingView)

On Thursday, bitcoin extended its pullback from the $45,000 resistance level, although initial support at $40,000 could stabilize the down move.

Buyers will need to keep BTC above the $37,000 breakout level to sustain the recovery phase. Further, if momentum builds, a decisive move above $46,000 could yield further upside targets toward $50,000.

Intraday charts are showing initial signs of downside exhaustion, which could encourage short-term buying into the Asian trading day.

Important events

6 p.m. HKT/SGT (10 a.m. UTC): Europe retail sales (Jan. MoM/YoY)

9:30 p.m. HKT/SGT (1:30 UTC): U.S. labor force participation rate (Feb.)

9:30 p.m. HKT/SGT (1:30 UTC): U.S. average hourly earnings (Feb. MoM/YoY)

CoinDesk TV

In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:

Reversing plans, Fedorov, the Ukrainian digital minister, announced the cancellation of an airdrop to crypto donors via his Twitter account. "First Mover" hosts spoke with Salman Banaei of Chainalysis for insights into tracking crypto transactions during the Russia-Ukraine war and how to ensure crypto is not used for to evade sanctions. Technical analyst Timothy Brackett of The Market's Compass, provided his crypto market analysis.


Crypto Investment Platform Zignaly Secures up to $50M in Financing Deal: The backing comes from Luxembourg-based GEM, a $3.4 billion alternative investment group.

Foundry Digital Joins Crypto Lobbying Group Blockchain Association: The digital asset mining and staking company joins the lobbying group as policymakers consider regulations for the crypto industry.

Pantera Capital Leads $10M Investment in NFT Infrastructure Startup Rarify: Rarify helps companies natively integrate non-fungible tokens into their platforms.

First Mover Americas: Fed Hikes Could Drive Bitcoin Adoption in Emerging Markets: The latest moves in crypto markets in context for March 3, 2022.

US Tax Agency Moves to Dismiss Lawsuit by Tezos Stakers Who Refused Refund, Demanded Trial: The Internal Revenue Service argues that Joshua and Jessica Jarrett had no right to refuse the refund of almost $4,000, which was paid, therefore the case should be dropped.

Longer reads

Review of 6 Crypto Tax Software Packages: A crypto tax expert investigated a host of innovative and ambitious crypto tax companies and the products they offer. Here’s what he found.

Today's crypto explainer: DeFi Lending: 3 Major Risks to Know

Said and heard

"Russia’s dependence on systems like SWIFT bank messaging, correspondent banking and ApplePay is a product of the global dominance of a unified market-capitalist status quo. This status quo represents the neoliberal “End of History” that was widely presumed to have arrived with the fall of the Soviet Union. But there may be no better sign of the end of the End of History than the weaponization of finance happening right now." (CoinDesk columnist David Z. Morris) ... "I am writing this appeal from a bunker in the capital, with President Volodymyr Zelensky by my side. For a week, Russian bombs have fallen overhead. Despite the constant barrage of Russian fire, we stand firm and united in our resolve to defeat the invaders." (Andriy Yermak, head of the Presidential Office of Ukraine, for The New York Times) ... Stopping major banks like Sberbank from using dollars and excluding others from the Swift messaging system still plunges the economy into chaos, especially if foreign businesses are afraid to buy Russian energy despite the sector’s explicit exclusion from sanctions. But hard currency will probably keep gushing in through energy-focused lenders like Gazprombank, and can theoretically be used to pay for imports and buy the ruble. (The Wall Street Journal) ... In Beijing, the ripple effects of a move that may cost China dearly are now sinking in, say the officials and advisers. Some officials say they are fearful of the consequences of getting so close to Russia at the expense of other relationships—especially when Russian aggression against Ukraine is isolating Moscow in much of the world. (The Wall Street Journal)

CORRECTION (March 3, 2022, 12:36 a.m. UTC): Corrects ether's price, which was about $2,800 at the time of publication.


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Amitoj Singh

Amitoj Singh is a CoinDesk reporter.

Damanick Dantes

Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.

James Rubin

James Rubin was CoinDesk's U.S. news editor based on the West Coast.