(Kitco News) – Volatility spiked for financial markets on Tuesday amid a dangerous new escalation in the Russia-Ukraine conflict, which rattled investors as the prospect of nuclear war ticked higher, pushing many into the safety of the U.S. dollar, bonds, and gold.
“Stocks took a dive Tuesday as geopolitical heat between Ukraine and Russia pushed investors toward safer assets,” noted analysts at Secure Digital Markets. “Market jitters spiked after Putin threw down a gauntlet, lowering the bar for nuclear engagement following Biden's green light for Ukraine to hit targets within Russia. This turmoil sent the VIX—often called the fear gauge—up 10%.”
But by the afternoon, asset prices showed signs of recovery, with stocks climbing back into the green. Bitcoin (BTC) spiked to a new all-time high of $94,120 on Coinbase, while spot gold hit a session high of $2,640/oz.
At the closing bell, the major indices finished mixed, with the S&P and Nasdaq gaining 0.40% and 1.04%, respectively, while the Dow lost 0.28%.
Data provided by TradingView shows that Bitcoin initially whipsawed in response to the Russia-Ukraine escalation, but bulls recovered their footing at $91,000 support and used the momentum to push BTC to a new record high.
BTC/USD Chart by TradingView
The rally comes amid numerous positive developments that have excited crypto traders and overshadowed the increase in geopolitical tensions.
“In the last 24 hours, the headlines have been positive: We're on the cusp of trading options on crypto ETFs, MicroStrategy's prepping a hefty $1.75 billion fundraise to stack more BTC, and Trump's gearing up for a sit-down with Coinbase's head honcho Brian Armstrong,” Secure Digital Markets analysts highlighted. “Plus, Trump’s company DJT, is deep into negotiations to snap up the crypto exchange Bakkt.”
At the time of writing, Bitcoin trades at $92,420, an increase of 0.62% on the 24-hour chart. Spot gold, meanwhile, is up 0.89% on the session and trades at $2,634.10/oz.
The Fed is still the biggest influence on the markets
While the escalation in fighting between Russia and Ukraine has sparked volatility in the near term, the Federal Reserve’s policy decisions on interest rates remain the biggest factor in asset price performances, according to market analyst Bloodgood.
“Major stock indices had a bit of a dip last week, but the overall macro picture remains just as bullish—maybe worryingly bullish as almost every institution is max long stocks,” he said in his latest market update. “Part of the reason behind the shakiness last week was Powell's comments on Fed policy, namely that they don't need to hurry with more rate cuts and that inflation is still a problem.”
“Some months ago, I mentioned in the newsletter that the Fed will do everything it can to prop up markets leading into the election, so maybe it's no coincidence that Powell changed his tune right after Trump won,” he noted.
“In any case, Powell won't be able to do a lot of damage to the markets before the inauguration in January, and after that, it's anyone's guess what could happen,” Bloodood said. “Trump isn't exactly a fan of Powell's recent policies, so if they clash, Trump will probably get his way.”
“If we add to that the possibility that Elon and Vivek, who will be leading the Department of Government Efficiency (DOGE—yes, DOGE), manage to substantially reduce government spending, things could get very interesting post-inauguration,” he added. “There might be some shakeouts—especially when positioning is so skewed—but there's nothing to be too concerned about yet.”
Focusing on the Bitcoin chart, Bloodgood noted that King Crypto “continues its path into price discovery” and said, “Now, we look toward the $100k level, which will be a key milestone in BTC’s history.”
“So far, there has been no retrace worth mentioning, but given the two huge green weekly candles, we should prepare for a potential pullback and identify possible bid levels,” he warned. “Currently, besides the breakout area at $74k, the psychological level at $80k stands out as a potential target in case of a retrace.”
“Don’t get me wrong—we could see a third green weekly candle,” he clarified. “However, in this case, we should closely monitor the daily chart to see how it unfolds. I’ll be watching the daily range for any sudden moves.”
According to Ki Young Ju, founder and CEO of CryptoQuant, “#Bitcoin euphoria is here.”
“99.3% of UTXOs are in profit now,” Ju said in a post on X. “Everyone's happy. This euphoric phase typically lasts 3–12 months (except Nov '21 bull trap).”
“This started 2 weeks ago,” he noted. “Shorting now could be either catching the top—or shorting at the bottom of a parabolic bull run.”
Adding further support to the bullish outlook was CryptoQuant analyst burakkesmeci, who highlighted a golden cross on the Puell Multiple, which is a “crucial indicator for evaluating mining profitability.
“This metric is calculated as the ratio of the daily value of newly issued Bitcoin (in USD) to its 365-day moving average,” he explained. “By comparing miners' short-term revenues with long-term averages, it provides insights into mining profitability. The Puell Multiple is often used to analyze the relationship between mining revenues and market movements.”
“Over the past five years, Puell Multiple has crossed above its 365-day moving average three times, initiating a Bitcoin rally each time: March 30, 2019 → Bitcoin surged by over 83%; January 8, 2020 → Bitcoin gained over 113%; January 9, 2024 → Bitcoin rose by more than 76%,” he detailed. “This data shows that after Puell Multiple settles above its SMA365, an average increase of around 90% in Bitcoin's price has historically followed.”
“All these data points and the macroeconomic framework suggest that a strong bull rally might be on the horizon,” he said. “Puell Multiple, which allows us to make meaningful interpretations about mining profitability, indicates that Bitcoin could witness a price surge of up to 90% in the coming period. While relying on a single indicator is not ideal for making investment decisions, historical data, the ongoing rate-cutting cycle, and the potential for increased liquidity (QE has not yet occurred but is highly anticipated) suggest that a Bitcoin rally might be inevitable.”
Mixed performance in the altcoin market
It was a mixed day for altcoins as many tokens pumped while others dumped amid Bitcoin’s rally to a new all-time high and subsequent pullback.
Daily cryptocurrency market performance. Source: Coin360
Threshold (T) was the top gainer, increasing 16.2%, followed by gains of 9.7% and 9.1% for Curve DAO Token (CRV) and OriginTrail (TRAC), respectively. Tezos (XTZ) was the biggest loser, falling 11.9%, while EigenLayer (EIGEN) dropped 11.2%, and Axelar (AXL) fell 10.5%.
The overall cryptocurrency market cap now stands at $3.07 trillion, and Bitcoin’s dominance rate is 59.4%.
