Cryptocurrency prices were mixed Monday as investors continued to assess Russia's continued invasion of Ukraine.
Bitcoin was down nearly 1% to $40,873, while ethereum was up about 2% $2,902 and dogecoin was off slightly to $0.118661, according to CoinGecko.
'Critical Support'
The week started off with the news that Goldman Sachs had become the first major U.S. bank to trade over the counter, trading a bitcoin-linked instrument called a non-deliverable option with crypto merchant bank Galaxy Digital.
Meanwhile, Ukrainian President Volodymyr Zelensky said he was open to negotiations with Russian President Vladimir Putin but warned that failure to reach an agreement "would mean that this is a third World War."
"As the war between Ukraine and Russia intensifies, bitcoin and other cryptocurrencies have risen throughout last week, with BTC climbing back above $40,000, a level that remains as critical support," Tammy Da Costa, analyst at DailyFX said.
Although the geopolitical environment remains highly uncertain, Da Costa said that "elevated inflation and rising debt has resulted in investors adopting a more conservative approach, limiting gains for riskier assets."
"However, approximately six months after El Salvador adopted bitcoin as an official legal tender, the legalization of the digital assets in Ukraine has resulted in an increase in donations made to the war-stricken country, allowing bitcoin prices to start the week higher," she said.
In addition, Da Costa said, President Joe Biden recently signed an executive order aimed at promoting the responsible development of digital assets may lead banks and other major role players to promote the use of digital currency and to increase research and development for the industry.
"With both the Bank of England and the Fed hiking rates last week, virtual currency will likely remain vulnerable to developments in the conflict between Russia and Ukraine," she said.
Keegan Francis, bitcoin and crypto specialist, Finder, said "bitcoin has managed to hold its price above $40k since reclaiming this critical price level late last week."
'Digital Dollar Push'
"No other top 25 cryptocurrencies have broken out of their trend lines," he said. "The exception to this trend is that cardano, avalanche, and ethereum are all seeing double digit gains in the last 7 days."
Nicholas Cawley, strategist at DailyFX, said that "the cryptocurrency market had a fairly uneventful weekend with Bitcoin’s prior level of resistance between $42k-$42.5k holding firm."
One bullish impulse is the prior level of resistance at $39.6k has now been broken and this should act as initial support in the event of any sell-off," he said. "A confirmed break above $42.5k opens the door to another resistance zone between $45.5k and $46k."
Ethereum has outperformed bitcoin over the last week, Cawley said this move looks like it may continue.
"The ETH/BTC spread respected support around 650 and is now trading either side of 700," he said. "The next level of resistance, the February 4 spike high at 750 is likely to be tested in the near-term."
Winston Ma, managing partner of CloudTree Ventures, Author of The Digital War – How China’s Tech Power Shapes the Future of AI, Blockchain and Cyberspace", said that after Biden issued the executive order on US crypto regulation earlier this month, "most likely we will soon see the US government accelerates its digital dollar push, which will have profound impact on the global crypto market."
"The Administration places the highest urgency on research and development efforts into the potential design and deployment” of a U.S. central bank digital currency (CBDC)," he said. "This is a clear statement of support from the Administration and a change in tone from the recent Federal Reserve commentary, when Fed Chair Powell released the discussion paper on digital dollar only two months ago."
"The Fed is tech-ready if it pushes the digital dollar forward, Ma added.
He noted that when China started the international testing of its CBDC (eCNY) at the Winter Olympics in February 2022, the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology issued a report on the open-source code that they have developed and could be used as the groundwork for a CBDC.
