Cryptocurrency Market Sentiment Turns Risk-Off Amid Russia-Ukraine War
The cryptocurrency market is showing early signs of weakness this week, as risk aversion intensifies due to escalating tensions in the Russia-Ukraine war. Spot Bitcoin ETFs have recorded their first weekly outflow since mid-April, signaling a pause in institutional inflows. Traders should also keep an eye on three altcoins—Ethena (ENA), Taiko (TAIKO), and Neon (NEON)—which are set to experience upcoming token unlocks worth over $5 million each, potentially adding selling pressure.
Market Overview: Russia-Ukraine War Sparks Risk-Off Sentiment
Reports indicate that Ukraine completed its largest long-range attack of the war with Russia on Sunday, targeting four air bases and damaging 40 Russian warplanes. The covert operation, dubbed “Spiderweb,” utilized 117 drones, hitting 34% of Russia’s strategic cruise missile carriers, according to Ukrainian President Volodymyr Zelensky.
Russia confirmed these attacks in five regions, calling them a “terrorist act.” Peace talks between the two countries are scheduled to resume in Istanbul on Monday. However, the likelihood of the negotiations producing significant progress toward ending the war is slim.
These escalating war tensions and geopolitical uncertainties are driving investors toward safe-haven assets like gold, creating a risk-off sentiment in the market, which is unfavorable for the prices of risk assets.
Key Data: Institutional BTC Investors Show Early Signs of Weakness
Institutional demand for Bitcoin weakened last week. Spot Bitcoin ETFs experienced a slight outflow of $157.40 million, marking a break in their long weekly streak of inflows since mid-April. This outflow is weak compared to the flow observed during February. However, if this outflow intensifies, the price of Bitcoin could experience a sharp decline in the coming days.
Despite the signs of weakness in Bitcoin ETFs, Japanese investment firm Metaplanet announced on Monday that it had purchased an additional 1,088 BTC. The firm currently holds a total of 8,888 BTC. Meanwhile, shareholders of Meta, formerly known as Facebook, voted against adding Bitcoin to the company’s balance sheet.
However, spot Ethereum ETFs experienced a weekly inflow of $285.84 million last week, the highest since mid-February, marking three consecutive weeks of inflows since mid-May. If this inflow continues and intensifies, the price of Ethereum is likely to see a recovery in the coming days.
Chart of the Day: Bitcoin Bears Target $100,000 Mark
The price of Bitcoin closed below the daily support level of $106,406 on Thursday and decreased by 1.50% the following day. However, it recovered slightly over the weekend. As of Monday, BTC is trading below $105,000.
If BTC faces resistance around the daily level of $106,406 and continues its correction, it could extend the drop to revisit the psychologically important level of $100,000.
The Relative Strength Index (RSI) on the daily chart marks 51, pointing downward toward its neutral level of 50, indicating a fading of bullish momentum. The Moving Average Convergence/Divergence (MACD) also showed a bearish crossover last week. It also shows increasing red histogram bars below its neutral level, indicating an increase in bearish momentum and suggesting a correction ahead.
However, if BTC recovers and closes above $106,406, it could extend the rally toward its all-time high of $111,980.
Altcoin Markets: Token Unlocks This Week
Three altcoins are scheduled for unlocks of over $5 million each in token releases this week, which could add selling pressure. The unlock allows a certain number of tokens to be unlocked immediately after a certain period.
The list includes Ethena (ENA), Taiko (TAIKO), and Neon (NEON), which are unlocking tokens at 3.72%, 71.23%, and 6.48% of their circulating supply, respectively. Typically, when a token unlock represents more than 1% of the cryptocurrency’s circulating supply, it is likely to have a negative impact on the price as more tokens enter circulation. Therefore, traders should monitor these three assets for increased volatility this week.
In the next 7 days, major single token unlocks (over $5 million) will include ENA, TAIKO, and NEON. Significant linear unlocks (daily unlocks over $1 million) are expected for SOL, WLD, TIA, DOGE, TAO, AVAX, SUI, DOT, IP, MORPHO, NEAR, ETHFI, JTO, and others. The total value of…
Aside from these altcoins, large linear token unlocks (daily unlock amounts exceeding $7 million) this week include Solana (SOL), Worldcoin (WLD), Bittensor (TAO), Dogecoin (DOGE), Celestia (TIA), Avalanche (AVAX), Sui (SUI), Morpho (MORPHO), Ether.fi (ETHFI), Polkadot (DOT), Story (IP), NEAR Protocol (NEAR), and Jito (JTO).
These linear token releases are scheduled for unlocks and may have a less significant impact, as it is already anticipated by the trading community, which is likely to position itself accordingly.
However, traders should remain cautious, as the increased supply from token unlocks frequently generates negative sentiment among investors, which can put downward pressure on prices.
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