The information on this website is for general information purposes only. It is not intended as legal, financial and/or investment advice and should not be construed and/or relied on as such. Before making any commitment of a legal and/or financial nature you should seek advice from a qualified and registered legal practitioner and/or financial and/or investment adviser. No material contained within this website should be construed or relied upon as providing recommendations in relation to any legal and/or financial product. Qluster does not recommend and/or endorse products and does not receive remuneration based upon investment and/or other decisions 

Sanctions. Good for Bitcoin and Cryptocurrency?

The Biden Administration has come out swinging, hitting Russia hard with a slew of economic sanctions.

Markets observed the subsequent fall of the Ruble to a record new low.

Russian Ruble vs. US Dollar, RUB/USD - Weekly (W1)

Amid this recent batch of sanctions imposed, Russian President Vladimir Putin has since commanded a ban on foreign exchange loans and transfers by Russian residents outside of the country. 

A decree, signed by Putin later followed this attempt to stabilise the Ruble, requiring exporters to now hold at least 80% of their revenues in RUB. 

In addition, Qluster analysts point to the Russian central bank (CBR) doubling its key interest rate—up from 10% to 20%—to construct a price floor for the Ruble.

Over to the West...

The United States has taken an unprecedented move in banning all transactions with Russia's central bank and has frozen its reserves. 

Estimates place the Russian stockpile of savings worth US$ 630B, which has been built up from rising gas and oil prices. A US Treasury spokeswoman said the US and EU blocks on the Russian central bank's assets would immobilise almost half of the Russian foreign reserves.

In response, a Kremlin spokesman Dmitry Peskov said, "the sanctions imposed by the West on Russia were hard", but their country has the necessary potential to compensate for the damage. 

Indeed, the US-led sanctions will hurt Putin's pocketbook. Although, the business reality is that removing Russia from the global economy will be a monumental feat—and one that undoubtedly bears risks to the integrity of the US Dollar and Euro as cross-border settlement currencies. 

This severe devaluing of the Ruble is also likely to trigger another wave of inflation through Russia felt most by ordinary Russians.

Now, the trapped domestic market participants may begin to look for some asset classes to hedge with… 

Wait, did someone say Cryptocurrency? 

Bitcoin, $BTC - Daily (D1)

It is hardly a coincidence that Bitcoin jumped nearly 20% against the US Dollar off the back of these sanctions imposed by the West, severely limiting Russia's ability to trade in Western currencies. 

But, an apparent boon to HODLers..?

For cryptocurrency markets, there is absolutely no doubt about the effectiveness of these sanctions.

The prospect looks brighter should digital currency transactions emerge as a new platform for Russia and its business elite to leverage as alternative payments systems—i.e. cryptocurrencies—become more mainstream.

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Ether, $ETH - Daily (D1)

Observe an analysis of price action in Ethereum above.

As bullish as crypto is right now, Q must remind practitioners to avoid the cardinal sin of chasing price—one may find their entry meets headlong into resistance.

Technical principles instruct patience and waiting for opportune pullbacks to support zones for higher probability entries. 

Bitcoin, $BTC - 4 Hour (H4)

Ether, $ETH - 4 Hour (H4)

Recall that price theory suggests searching for long entries once candles have closed on higher timeframes with clear re-tests.

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Be very careful of aggressive downside action to major support. 

Staggering buy orders to a dollar-cost average (DCA) if the price goes lower is also a viable strategy. However, this approach can quickly devolve into a double-edged sword if the price breaks down.

DCA, Dollar-Cost Average: An approach to gaining exposure to investments or trade positions by dividing the amount of capital over a regular interval. These intervals are often subjective to the user's strategy and can be arbitrarily determined based on intervals such as price or time.

If momentum continues and price breaks higher—again—bullish re-tests are key to longer-term entries payout out. 

To those leverage trading, support and resistance levels may signal a price break up or down. 

Bitcoin, $BTC - 4 Hour (H4)

Ether, $ETH - 4 Hour (H4)

Q's Conclusion

A gentle reminder for the upcoming episode of Charting with Griff due tomorrow evening!

Don't forget. We've opened the vote to free subscribers—just this once.

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Blame the YouTube render gremlins...

See you again for the next update.

- q

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The information on this website is for general information purposes only. It is not intended as legal, financial and/or investment advice and should not be construed and/or relied on as such. Before making any commitment of a legal and/or financial nature you should seek advice from a qualified and registered legal practitioner and/or financial and/or investment adviser. No material contained within this website should be construed or relied upon as providing recommendations in relation to any legal and/or financial product. Qluster does not recommend and/or endorse products and does not receive remuneration based upon investment and/or other decisions