Bitcoin started the week and new quarter at higher levels than those observed at the beginning of the year, erasing its first quarter downtrend. However, despite its recent surge, the king of cryptocurrencies has been rangebound in the last couple of days, with the decline in volatility probably hinting that investors are scrutinizing the current complex market conditions to decide its future price direction. Although most altcoins seem to be following Bitcoin’s price action, there have been a few outperforming outliers.
Investors eye war developments
The ongoing war and the progress in ceasefire negotiations between Russia and Ukraine continues to be the main themes in cryptocurrency markets. Specifically, Bitcoin and Ethereum have been trading flat in the last couple of sessions as investors grapple with the overall uncertainty, triggered by accusations that Russia committed war crimes.
In response to the Russian unprovoked aggression, the European Union and its Western allies are considering even harsher economic sanctions, aiming to cripple the Russian economy. Nonetheless, these measures are also going to have an adverse impact on the European economy as a potential ban of oil and natural gas imports could ignite further inflationary pressures and even cause a recession. In turn, this could affect the ECB’s monetary tightening plan, eventually forcing the Bank to continue providing liquidity in the markets.
In the past, Bitcoin has demonstrated safe haven and inflation hedging attributes as well as positive correlation with risky assets, outperforming in “easy-money” periods. Concluding, the developments and outcome of the war appear to be having an unclear impact on cryptocurrencies, which could be the main reason why investors seem to be on hold currently.
UK adopts pioneering crypto initiatives
On Monday, the UK government announced a detailed plan for the use of crypto-assets and their underlying blockchain technology as alternative and more efficient forms of payment. Specifically, the country’s financial services minister stated that the government is working towards the legislation of a new regulatory framework for stablecoins, enabling the execution of payments and transactions by consumers. Moreover, the UK finance minister ordered the government-owned coin production firm to create a non-fungible token that will be officially issued by June as a part of the broader adoption of crypto-related assets.
Dogecoin explodes after Musk’s announcement
Dogecoin spiked 10% on Monday after Elon Musk revealed that he would hold a 9.2% passive stake in the social media behemoth, Twitter. Although there seems to be no direct correlation between Elon Musk’s Twitter deal and Dogecoin, the memecoin benefited from the fact that Musk has previously endorsed its development and adoption, while his electric car company Tesla accepts it as a form of payment
Bitcoin stuck in a tight range
Bitcoin has been trading without a clear direction after its recent uptrend halted at the 200-day simple moving average.
A break beyond the upper boundary of its sideways move could encounter immediate resistance at the $52,000 barrier.
Alternatively, bearish actions may push the price lower, sending it to test the $41,000 hurdle.
Overall, the war and its tremendous repercussions on the global economy appear to be the main reasons behind Bitcoin’s recent consolidation. However, the largest cryptocurrency by market capitalization retains its bullish short-term structure, while a peace truce could ignite further buying interest.