Hopefully, the ensuing economic fallout, not to mention dire human cost, is enough to dissuade the major players from escalating.
Bitcoin finishes a relatively subdued 7-day period strong, currently trading at $44.2k. The looming spectre of U.S. interest rate hikes has moved to second billing while investors mull over the likelihood of conflict in Ukraine and its consequential severity on global markets if the situation deteriorates. Hopefully, the ensuing economic fallout, not to mention dire human cost, is enough to dissuade the major players from escalating. Crippling economic sanctions on Russia promised by the U.S. coupled with the risk of more inflationary pressure on those European economies reliant on Russian natural gas represent significant deterrents.
Some commentators have pondered whether geopolitically-charged inflationary pressure could provide a tailwind for BTC although, in this scenario, the likelihood is that investor fears around global macro stability and tightening monetary policy will have a dampening effect on risk-on assets, bitcoin included. Despite the cause for concern, CoinShares are reporting the 4th straight week of crypto fund inflows, perhaps hinting that institutions are coming to terms with the forthcoming monetary policy landscape. Yet these inflows are small compared to the scale of those throughout 2021 - bitcoin will need to regain that level of institutional adoption once more if it is to make major gains in 2022.
Network hashrate has picked up some momentum. The 14-day moving average hit a new 197 EH/s all-time high, topping mid-January’s previous best. This means we’re set for a mid-week 4% increase in difficulty to 27.7T, marking a 6th consecutive upwards adjustment and a 14th out of the 15 since the fallout from the China crypto mining ban. Hash price is currently sitting at $0.21 and there is likely BTC-induced volatility ahead as the markets react to the large macro events due to play out over the coming months. With volatility comes opportunity - be ready to capitalise on it. Happy mining!