What is going on? The Market Overview

2022년 3월 11일

BTCUSDT

Well. It has been a very unexpected month in the least to say.

There is a lot to go over so I will likely be arranging this Overview into a few sections so as to not overwhelm with too much and keep the points concise.

Major Events


Russia:

- The Russian Rubles has plunged below $0.01 to a historical low with to a current exchange rate now of 130 Rubles to the USD hitting a peak of 150 during the week. Down by over 35% year to date.

- The US has issued a ban on the Imports of Russian Oil

- The U.S Senate has passed the $1.5 trillion federal funding bill which includes up to $13.6 billion in aid to Ukraine and managing to avert a shutdown.

- Biden on Wednesday signed an executive order on government oversight of cryptocurrency which urges the Federal Reserve to explore whether the central bank should jump in and create its own digital currency.

- Russia's invasion of Ukraine is now at day 16 with 3 Peace Talks already having failed and the situation continuing to develop.

- Many Sanctions have been issues on Russia on behalf of essentially the world by this point and

- Russia's Government and largest bank/lender Sberbank which held roughly half of Russia's retail deposits was forced to exit Europe due to a number of significant events starting with:

1. Being removed from the SWIFT global banking system.
2. Global Sanctions
3. It's European subsidiaries were dealt with abnormal outflow as Russian's rushed to withdraw funds and it could no longer supply
liquidity.
4. The European Central Bank ordered the closure of Sberbank Europe
5. Following these events Sberbank' stock has turned in to a Penny stock dropping 96% from the months start of $13.94 to it's
current price sitting at $0.50

- Russia has frozen the MOEX exchange to prevent any further outflow of liquidity following the escalating sanctions which have nearly crippled the countries economy. The exchange was frozen February the 28th to deal with sharp price drops and the sanctions and is now into it's second week of closure.

- To give an idea of the outflow that the MOEX faced. The day Russia invaded Ukraine February the 24th, its MOEX stock market plummeted by around 50%, losing $259 billion in market value.

- Major companies from BP to Apple and McDonalds have pulled out of Russia or scaled back their operations in the country for fear of further sanctions as well as for the safety of staff for some.

- Sanctions by the West and Europe aimed at crippling Russia's economy have been successful in most aspects of cutting off Russia from the world and basically 'striking it where it hurts' ranging in virtually every sector.

- Inflation has hit a 40 year high this week with Consumer prices soared by 7.9% in February from the year before. This has also jolted investors into safer assets such as gold as well as holding on to cash.

- Higher than expected Inflation data has ramped up pressure on the Federal Reserve to take a firmer stand against soaring prices and adhere to more hikes than previously thought.

- Most Financial Institutions are looking at a 50-bp hike in March as well as five more 25-bp hikes during 2022 to bring the total to a range of 150-175 basis points this year. This is a shift from the previously thought '3' hikes now being 5 most likely.

- Wall Street seems to be still unsure of exactly what direction the market will take as the Russian Invasion of Ukraine seems likely to extend with Russia still showing persistence and upping it's attacks and siege of Ukraine.

- Gold struck a high of $2057 during the week and is now sitting at $1988 with the price likely to continue rising as Investors seek to minimalize exposure from the markets volatility.
- It should be kept in mind that while gold is surging it is most likely short term as most Investors will want to sell their gold once Russia's invasion of Ukraine is over to purchase assets and commodities once the political climate start to change tone and likely towards the end of the year gold could be looking at about the $1650-$1800 range depending on how the market is by then.

Final Notes:

Market Sentiment
- While the market sentiment and recent geopolitical events have been anything but positive. I personally am looking at a positive shift in the tides towards the beginning and middle of summer as investors are currently dealing with the Fed's interest rate hikes alongside Russia's invasion of Ukraine but once these pass investors will be more incited to jump into the market.

Russia
- Russia's economy and Russian stocks will likely have a much longer time of recovery and likely not be good investments for a long time as global sentiment of them is not only at an all time low but with the MOEX having been closed traders have seen what Russia is willing to do and 'can' do in desperate times and thus traders will need a much stronger incentive to take the risk to jump back into Russian based commodities and stocks which most investors likely won't do.

Crypto
- To start, the most likely reason for Biden's Executive order/crackdown on crypto is to deal with Russia's Oligarchs and Elites purchasing Crypto as a way to avoid the sanctions being imposed on them, this isn't the main reason behind the order but is likely one of the reasons the order was pushed through with haste so as to prevent these individuals from buying any assets or using the crypto.

- To clarify on this. Crypto is decentralized of course, however the government with it's crackdown on crypto can identify which wallets may belong to certain individuals that may be on the sanctioned list and they can ask exchanges to block accounts which may be linked to certain addresses. Bitcoin addresses cannot be blacklisted of course but exchanges can prevent these addresses from buying and selling which definitely would put up a challenge for most trying to get around the sanctions.
- Last week alone crypto saw inflows nearly triple to the highest in three months with data showing minor outflows in Europe and large inflows in the Americas.

- Personally crypto is a safe bet, and investors are looking at crypto even during this turbulent geopolitical climate as crypto has managed to proved well against most other assets and investments which have seen significant plunges in the past two weeks compared to crypto.

- Bitcoin has presented major support at $37,600 and has been trending between the $37-42k range almost breaking through $42,600 before it was promptly rejected and slid down to $38,600 where it is currently hovering at.

- If there was ever a good time to see Market Makers do their thing it is this week most definitely as they pushed the price up causing a surge before promptly bringing it back down. Market makers will always do what is best for them, especially during times such as these. But such also signals that the major players are still here and likely will stick along.

- In the long-term and especially around the start of summer I see prices going back to previous highs and likely the formation of new highs depending on how the global climate is of course by then but this current set of ongoing events has shown traders that Crypto can deal with rough events without being pummeled like we've seen happen to major stocks.

- As a final note, in consideration of everything. Now is a very good point to buy into crypto with the idea of a long term hold as we've already seen what has happened to crypto and the growth it has gone through this year. Yes it has come down a lot, but so has the entire market. However, crypto can't be frozen or trading stopped like we've seen with the MEOX. It is being viewed now as a safer asset to hold and is proving itself during this turbulent period against the market. While things may be down now. We are looking at prices we had last seen in July of 2021. The fact is, we may never see these prices again and in the long run, we know where things will be. And that's what matters most importantly.

Thank you for taking the time to read this. I hope you have an amazing day and please offer prayers to those in Ukraine as well as those that have been forced into this war. May they be protected and the utmost blessings be with all Ukrainians and all those aiding in the war effort as well as those looking to help and protect those trying to escape it. May this suffering and unjust invasion come to an end and may trembling hearts be comforted and the vulnerable shielded. We pray for you Ukraine and most importantly, we believe in you. ~ Rock