Crypto markets rose slightly over the last week despite the Russia-Ukraine conflict dominating the news and markets. There a lot of noise for investors to consider arising from the conflict, so we're explaining this week top stories to make sense of the geopolitical uncertainty.

It all about Ukraine and Russia

Over the last week crypto markets performed variably, but Bitcoin and Ethereum led the rally by rising at 3.25% and 7.6% respectively. Bitcoin is still struggling to break through and stay above the $40,000 (USD) mark, but it also sitting comfortably above its low of $34,000. The question is whether this rally will continue as news breaks daily.

In a nutshell, the Russian government has recognised two regions in Eastern Ukraine as independent and has authorised troops to deploy in those areas. The Russian government claims this deployment is for humanitarian reasons, while the United States and many countries are calling it an invasion.

The global community has responded quickly to Russia actions. Specifically, the European Union has resolved to exclude Russia from the international financial system by blocking certain Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT). In this way, the European Union is cutting of Russian financial institutions from making any interbank transactions with non-Russian entities.

The exclusion of Russian institutions from SWIFT underscores the power of centralised financial institutions to regulate the international economy. Arguably, the sanctions placed on Russia are pushing many within its jurisdiction to adopt cryptocurrencies to avoid the sanctions and move assets internationally without SWIFT.

However, it is not expected that this will spur a rise in cryptocurrency prices. The movement of Russian assets into cryptocurrencies is likely to be temporary and a means to migrate funds into other fiat currencies. This may explain Bitcoin one-week implied volatility jumping to an annualised 75% last week. The spike in implied volatility means that there is more uncertainty in the market and increased likelihood of price swings. So, expect the next week to be a turbulent time for crypto.

Stagflation on the Horizon

Investors and analysts have begun to question whether the world major economies are entering into a period of stagflation. Stagflation refers to an economy with higher than normal inflation and unemployment rates, without meaningful economic growth.

The stagflation narrative is meaningful for crypto investors because Bitcoin is seen by many investors as a hedge against inflation (meaning it would do well). However, as recent weeks have shown, Bitcoin is also highly volatile which would make it an asset unlikely to be held by investors during an economic downturn where defensive assets, like gold and bonds, are preferred.

This is the view of Bob Iaccino of Path Trading Partners, who noted that the continuing positive correlation between crypto and the NASDAQ shows that stagflation would certainly hurt crypto markets.

In this respect, the conflict in Ukraine is also significant as any sanctions imposed on Russia could expedite and lock in the rise in inflation. Russia produces 17% of the world gas, 13% of the world oil and around 15% of traded thermal coal and coking coal. Any sanctions on Russia will place huge pressure on global energy markets, which in turn will increase prices for almost all goods and services across the global supply chain.

It appears that all signs are pointing to a prolonged winter' for crypto markets. But this does not mean the value of all crypto assets will tank. Glassnode, an on-chain market intelligence company, noted that current Bitcoin price movements are being almost entirely driven by short term traders. Long term holders are generally holding their Bitcoin, which shows a sustained conviction in the asset that may see the price hold relatively steady during any prolonged winter' period.

Upcoming Initial Coin Offerings

An initial coin offering (ICO) is the cryptocurrency equivalent to an initial public offering (IPO). During an ICO, cryptocurrency projects will raise interest in their project and sell an initial allocation of coins to investors to raise funds.

Here a list of the latest ICOs that are about to drop:

CoinICO End DateBattle Inu1 Mar 2022Metan Evolutions1 Mar 2022Cybershinu7 Mar 2022IndiGG8 Mar 2022Drunk Robots11 Mar 2022

[Source: Coin Market Cap]