News updates February 25, 2022

1. Ukraine’s Ministry of Defense Unable to Accept Crypto Donations

   * Many have expressed a desire to help Ukraine in the midst of the Russian invasion.

   * While the Ministry of Defense set up a bank account specifically for foreign currency donations, it is legally unable to accept crypto donations.

   * Crypto’s potential use as a vehicle for donations has perhaps seemed more clear in recent weeks.

   Following Russia’s incursions into Ukraine, many have expressed an interest in donating to the nation’s defense efforts. However, the Ministry of Defense is barred legally from accepting cryptocurrencies. 

   Crypto Donations in Times of War:
   It seems more people are waking up to the potential use-case of digital assets for donations in support of various efforts or causes—or military conflicts. 

   While Ukraine is enduring a foreign invasion from Russian military forces, the Ministry of Defense in Ukraine has received an influx of inquiries from foreigners wishing to donate. Due to “national legislation,” though, Ukraine’s Ministry of Defense is unable to accept alternative payment systems like Bitcoin or PayPal.

   With that said, the Ministry of Defense did open up a bank account dedicated to foreign currency donations “due to numerous requests from individuals and legal entities who are not residents of Ukraine” who wish to donate. The donations support the Armed Forces of Ukraine, according to the Ministry of Defense, in terms of both logistical and medical support. 

   The bank account that would allow foreign donations was only set up following a significant amount of requests from people wishing to donate. Those who wish to directly support military units and institutions actively engaged in the conflict with Russia would need to directly contact those groups’ commanders or chiefs. 

   The crypto market suffered a severe decline today on news of Russia’s military offensives in Ukraine, and it has been trembling for several weeks now over fears of exactly what occurred today. Over the past year, crypto donations to Ukrainian non-government organizations and volunteer groups increased dramatically, likely also due to escalating concerns over military conflict with Russia.

2. WITH FINANCIAL MARKETS IN TURMOIL, WILL BITCOIN BENEFIT?Unprecedented times with unwinding credit are increasing market volatility. Bitcoin will eventually benefit, but it won’t be smooth sailing. THE LARGER MACRO PICTURE: Last night, Dylan shared an extensive thread on Twitter covering the current macro picture across stocks, bonds and volatility in the market. In today’s Deep Dive, we’re expanding on some of those ideas and charts more in-depth as these are some of the more important market dynamics that will affect all markets in 2022, bitcoin included. The overall ethos of the thread and a thesis we’ve discussed many times in the Deep Dive is that we’re in unprecedented times with over a decade of negative real rates contributing to the everything bubble we’re in today. The market now has to face the second order effects. Second order effects, such as higher periods of volatility, have been more frequent over the last few months. Higher volatility is a direct result of lower credit market liquidity. Looking back at an extreme period of volatility during March 2020, markets violently sell-off in the face of a credit unwinding. Like most risk assets, bitcoin is severely affected in these higher periods of market volatility and rising U.S. dollar strength as told through the VIX relationship. We’re likely due for more market volatility going forward. Bitcoin is affected in higher periods of market volatility and a rising U.S. dollar strength. Yet in the aftermath, this is the opportunity for bitcoin. Is bitcoin a beneficiary of the massive credit bubble around the world? Undoubtedly. If credit markets continue to unwind will the price of bitcoin face headwinds? Almost assuredly.
3. Bitcoin and Ethereum Rally, SOL and LUNA Accelerate: Bitcoin price recovered sharply from the USD 34,500 zone. Ethereum is back above USD 2,600, XRP nears USD 0.70. LUNA rallied over 22%, and SOL gained 16%. After testing the USD 34,500 yesterday, bitcoin price jumped 12% and is now (04:18 UTC) trading above USD 38,900. Similarly, most major altcoins trimmed losses. ETH surged 11% and broke the USD 2,600 resistance. XRP is now attempting a close above USD 0.70. ADA tested USD 0.75 and moved above USD 0.85. 1) Bitcoin price After a strong decline, bitcoin price found support near the USD 34,500 zone. BTC formed a base above USD 35,000 and started a major recovery wave above the USD 38,000 resistance level. On the upside, the price is facing resistance near the USD 39,500 level. The next key resistance is near the USD 40,000 level, above which the price might gain bullish momentum. If there is a downside correction, the price might test the USD 38,500 support. The next key support is near the USD 37,500 level, below which BTC may perhaps decline to USD 36,200.                                        2) Ethereum price. Ethereum price also followed a similar path and started a fresh increase from the USD 2,300 zone. ETH climbed above USD 2,600 and now faces resistance near USD 2,650. The next key resistance is near the USD 2,750 zone, above which the price may perhaps test USD 2,880. If not, it could correct lower towards the USD 2,550 support. The next key support is near the USD 2,500 zone, below which the price might test USD 2,420.                                                       3) ADA, BNB, SOL, DOGE, and XRP price. Cardano (ADA) declined sharply and tested the USD 0.75 support. It is now correcting losses and trading above USD 0.80. There was a move above the USD 0.85 level, but the bears might remain active near USD 0.90.                                                     BNB recovered above the USD 350 level. It is now attempting an upside break above the USD 365 resistance level. If there is a clear move, the price might rise towards the USD 388 level                                                             Solana (SOL) is up 16% and trading above the USD 85 resistance level. The next major resistance is near the USD 95 level, above which the bulls might test the USD 100 level.

DOGE declined towards USD 0.105 before it started a recovery wave. The price is now consolidating above the USD 0.120 level. On the upside, the bulls could face resistance near the USD 0.125 level.

XRP price spiked and tested the USD 0.62 support. The price is now recovering and trading near USD 0.70. A close above USD 0.70 could set the pace for more gains.

Other altcoins market today:

Many altcoins are up over 10%, including LUNA, MATIC, CRO, WBTC, FTT, BCH, UNI, MANA, HBAR, SAND, XTZ, and HNT. Out of these, LUNA rallied 22% and traded above the USD 65 level, increasing its weekly gains to 34%.

Overall, bitcoin price is gaining bullish momentum and trading above USD 38,000. If BTC clears USD 40,000, it could move into a bullish zone.

4. Bitcoin Monthly Cyclicality Paints Grim Picture For Last Week Of February: 

For the past year, bitcoin has shown a cyclicality that has been on a semi-regular basis. For most of last year, most months had finished in the positive with green candles dominating the market. However, while most of the months have been positive, there have been significant differences between the first half of the month and the second half. This push and pull pattern has continued into the new year, spelling some bad news for the end of February.

Looking At Monthly Cyclicality Through 2021

Eight months out of the last 14 months have been recording positive returns mid-month. Across these eight months, the returns have not carried on to the end of the month for five months, leaving only three months that saw positive mid-month to end-month returns. Most of bitcoin’s gains have been recorded occurring in the first half of the month, while the second half usually suffered losses.

 February End Not Looking Good For Bitcoin

Given that this cyclicality has carried on into 2022, then the last week of February may see the digital asset end on a low note. Bitcoin and other cryptocurrencies are already being rocked by social and political issues, most recently, the invasion of Ukraine by Russia. These have seen the digital asset plummet towards $35,000, giving bears a complete hold of the market.

For the first half of February, bitcoin had recorded 17% growth. But from mid-month to the end of the month, it has turned down, with over 12% losses already being recorded. If this pattern continues, then bitcoin is looking at another week of losses before ushering in the month of March. This would mean that the digital asset could see significant growth from the beginning of March till mid-month.

5. Bitcoin Reverse Losses, But Why $40K Still Is The Key: 

Bitcoin found support near $34,300 and started a strong recovery against the US Dollar. BTC climbed above $38,000, but it is still struggling near $40,000.

* Bitcoin found support near the $34,300 and $34,500 levels.

* The price is trading above $38,000 and the 100 hourly simple moving average.

* There is a key bullish trend line forming with support near $37,600 on the hourly chart of the BTC/USD pair (data feed from Kraken).

* The pair could rise further if there is a clear move above $39,500 and $40,000. 

Bitcoin Price Gains Momentum:

Bitcoin price extended decline below the $35,000 support zone. However, BTC found support near the $34,300 and $34,500 levels. A low was formed near $34,333 and the price started a strong upward move.

The price climbed above the $36,500 and $37,000 resistance levels. The bulls were able to push the price above the $38,000 level and the 100 hourly simple moving average. It even spiked above the $39,500 resistance level, but there was no upside continuation.

A high is formed near $39,739 and the price is now consolidating gains. It traded below the 23.6% Fib retracement level of the upward move from the $34,333 swing low to $39,739 high.

Bitcoin is now trading above $38,000 and the 100 hourly simple moving average. There is also a key bullish trend line forming with support near $37,600 on the hourly chart of the BTC/USD pair.

On the upside, an immediate resistance is near the $39,200 level. The next key resistance is near the $39,500 level. The main resistance is still near the $40,000 level. A clear move above the $40,000 resistance could send the price further higher. In the stated case, it could even test $41,200.

Dips Limited in BTC?

If bitcoin fails to clear the $39,500 resistance zone, it could start a downside correction. An immediate support on the downside is near the $38,000 zone.

The next major support is seen near the $37,800 level and the trend line. If there is a downside break below the trend line support, the price might gain bearish momentum towards $36,000.

6. South Korean crypto businesses scramble to meet FATF travel rule

Around 30 South Korean crypto and blockchain firms have officially started partnering with CODE, a joint venture formed to meet the Financial Action Task Force (FATF) travel rule.

* FATF’s travel rule is a global set of guidelines for virtual asset service providers (VASPs) designed to combat money laundering and terrorist financing by requiring crypto firms to collect and disclose customer information for transactions above a threshold of US$1,000.

* CODE’s travel rule solution uses blockchain to record transactions and customer data on nodes operated by member entities in a distributed server. 

* CODE has completed testing its solution on its three shareholders — Bithumb, Coinone and Korbit — and is reviewing partnerships with various domestic and international crypto service providers, Bithumb announced on Friday. 

* South Korea’s largest crypto exchange Upbit’s operator Dunamu is not a CODE member and has developed its own travel rule solution VerifyVASP. 

* South Korea has mandated the travel rule for all transactions over a million Korean won (US$831.12), which will be in full effect from March 25. 

Global exchanges have been hesitant to incorporate FATF’s travel rule due to privacy concerns, but South Korea will be one of the first countries in the world to embrace the condition for local businesses.