Bitcoin (BTC) edged higher after Wall Street opened on Feb. 24 with Russia's Ukraine invasion and its aftermath still top on markets' agenda.
Risk sentiment set to be "dominant driver" in crypto
Skittish markets faced the music from Russia's overnight incursion into Ukraine, a move that continued and ricocheted across global trading.
Russia's stock market unsurprisingly faced a different level of trauma, with MOEX losing 50% and at one point halting trading altogether.
Bitcoin, suffering earlier in the day, nonetheless staged a respectable comeback.
"At the start of the week, escalating tensions between Russia and Ukraine had hit crypto markets hard. Our crypto indices were already showing sizeable losses across all sectors," Sahil Sakhrani, a market analyst at crypto research firm Macro Hive, told Cointelegraph.
Sakhrani warned that the announcement of further sanctions against the Russian economy may exacerbate the situation anew and that Bitcoin's correlation to traditional equities markets should not be overlooked.
"Now the news has worsened with an apparent Russian invasion of Ukraine followed by the EU, the U.K., and the U.S. proposing further sanctions against Russia," he continued.
"Risk aversion is likely to be the dominant theme for markets. With the correlation between Bitcoin and NASDAQ picking up again, broader risk sentiment will likely be the dominant driver of crypto markets."
A second bone of contention came in the form of the United States Federal Reserve potentially slackening key rate rises due to the conflict.
Pershaps the #Fed is relieved that #Russia invaded the #Ukraine as now it has an excuse not to raise interest rates in Mar. If it wasn't this it would've been something else, but as far as excuses go this one's hard to top. #Gold spiked 1.5% and #Bitcoin dumped 5.5% on the news.— Peter Schiff (@PeterSchiff) February 24, 2022
For popular trader and analyst Pentoshi, however, such a theory seemed out of place.
"If you have an impending recession w rates at 0 and inject more capital you get something worse. Stagflation," part of a recent Twitter update argued.
On the topic, economist Mohamed El-Erian said that such risks "come at a time when Fed policy flexibility is limited and liquidity can be patchy."
Liquidations pass $500 million
The day's events, meanwhile, sent derivatives funding rates well into negative territory as traders weighed the likelihood of more downside.
"Heavy" selling by shorters was thus in evidence, research firm Numbrs added about the data.