Yesterday, the price of Bitcoin seems to have given a show of strength, despite a declining sentiment.
At such a complicated time for financial markets, with major fears related to the war in Ukraine, the fact that it has rebounded cannot be dismissed as normal market fluctuation.
The crypto drop
On Wednesday, 23 February, in the evening, the price had started to fall due to the news of the start of the war in Ukraine, dropping from $39,000 to $34,300 in just over 12 hours.
The news arriving from the theatre of war was – and remains – terrible, but something happened yesterday that reversed the trend.
The rise of the market
At one point, the market started to rise again, bringing the price back up to $36,000, almost as if investors had already taken their countermeasures against the possible crisis generated by the war.
In the evening, however, while US President Joe Biden was holding a press conference to explain the actions taken, the price of Bitcoin shot up to over $39,000 in less than an hour.
In the hours that followed it fell to just above the $38,000 mark, virtually the same level as Wednesday.
So yesterday it first lost 12%, and then recovered all the losses.
The reasons
To be fair, something similar happened to the Nasdaq as well, so this dynamic has reasons external to Bitcoin, but the Nasdaq’s rise was not as sudden, and there was no real spike.
It is possible that Bitcoin’s spike could be due to what Biden announced.
Indeed, he declared that Russian international transactions in dollars, euros, pounds and yen would be blocked. Since their currency, the ruble, is not commonly used in the rest of the world, there is a possibility that Russia will decide to use Bitcoin to circumvent these restrictions.
For now, this is only a hypothesis, but it is possible that this very hypothesis may have convinced some whales to accumulate BTC yesterday taking advantage of the particularly low prices. This may have significantly increased the buying pressure on the markets at a time when the selling pressure was waning.
Fear diminishing
During the same period, fear in the crypto markets went from Extreme to Normal, with the Fear & Greed Index going from 23 to 27. This means that fear still dominates the crypto markets, but no longer terror.
The reaction of Bitcoin’s price to this slight change in sentiment, however, seems to have been too consistent to be explained in this way alone. Therefore it has been suggested that it may have had something to do with possible Russian reactions to US sanctions.
Source: https://en.cryptonomist.ch/2022/02/25/bitcoin-sentiment-turns-extreme-fear-price-rises/