by CoinMarketCap data showed that the crypto market dipped by 8.2% from $1.97Tr at the beginning of the week to $1.83Tr. Likewise, the S&P index also declined by 1.5% this week.
Investors Switch To Safe Assets
This week started with news that Russia might invade Ukraine. Prominent western leaders revealed the information of a possible Russian invasion of Ukraine. Thus, investors panicky moved their assets from the volatile crypto market to more safe-haven assets such as stablecoins. Consequently, the crypto market lost about $165B of its valuation.
As investors moved their assets from the crypto space, they moved them into stablecoins and other safe-haven assets such as the US treasuries and gold. Thus, trading volumes in this asset category surged by nearly 15% and are close to $72.4B as of this writing. Most industry experts are starting to wonder whether digital assets are genuinely a hedge against inflation because the crypto and conventional stock markets have been trading alike in recent weeks.
A top-level executive with FxPro, Alex Kuptsikevich, opined that “the leading cryptocurrency can no longer be considered as a hedge against inflation compared to the demand for and performance of gold, especially during this week.” BTC sunk to a 2-week low on Feb. 18 after trading at sub-$40K levels.
The year started with worries over the crypto market’s performance in line with the forex and stock markets affected by increasing inflation rates and the hawkish stance of the US fed over interest rates.
Focus On Stablecoins
As investors reduced their exposure to crypto assets, many turned their attention towards stablecoins. USDT’s trading volume was the highest among the stablecoins over the past seven days, with nearly $350B worth of USDT purchased during this period – an amount that’s about twice that of the amount of BTC purchased during the same period.
Besides USDT, many investors also increased their BUSD and USDC tokens, with about $49B invested in both stablecoins. Many investors became more interested in USDC after its issuers (Circle) secured the deal that allowed it to be a publicly-listed firm on Nasdaq.
Russia Is In The News For Positive Reasons
Aside from a possible invasion of Ukraine, Russia is also making progress in releasing its crypto policy. While the bill’s draft hasn’t been made available to the public yet, the nation’s finance minister revealed that all public discussions regarding the bill would be closed before the next month-end.
A spokesman of the ministry claimed that “the next stage in the release of the bill should take place a few weeks after completing this public consultation stage.” Despite strong opposition from Russia’s apex bank regarding the crypto market, the president supported the finance ministry in discussing the issue publicly.
The finance minister suggested that the nation should find a means of earning through the crypto market rather than outright banning it. Per a new Bloomberg report, Russia stands to gain a lot from legalizing cryptos as it holds 12.5% of the world’s crypto economy.
