Bitcoin and other cryptocurrencies extended a recovery on Wednesday as recent U.S. sanctions against Russia were perceived to have minimal economic impact.
Bitcoin rose nearly 6% to $38,967 from a near one-month low hit on Tuesday, while altcoins including Ethereum, Binance Coin and XRP added between 4% to 5%.
Total crypto market capitalization also rose 3.8%, standing at $1.85 trillion. Fears of a conflict had knocked roughly $100 billion off markets last week.
U.S. President Joe Biden announced a first wave of sanctions against Russia after the country deployed troops into eastern Ukraine. The blacklist covers two banks, certain elites in the country and most importantly, Russian sovereign debt.
But U.S. officials made it clear that they had held off introducing more damaging restrictions, on hopes of diplomacy with Russia.
Reuters explains that the sanctions avoided major Russian banks, which have deep-seated roots in the global financial system. They are also not yet as damaging as those imposed during Russia’s annexation of Crimea in 2014.
Sanctions by European countries also shied away from blacklisting big Russian banks. Stricter measures would likely target Russia’s oil supply to Europe.
Analysts said a recovery in global markets today was likely due to the sanctions being less severe than expected, and that investors were still holding out for potential de-escalation. Mark Haefele, Chief Investment Officer of Global Wealth Management at UBS says-
Markets bounced off their lows after Biden announced
only moderate sanctions, and recognized he intends to minimize any
impact that sanctions could have on the U.S. economy.
Sentiment still cautious
Despite a mild recovery in the market, gains in safe-haven assets showed that fears of a conflict were far from over. Stablecoins, particularly Tether, commanded the largest volumes among cryptos in the past 24 hours, while gold and U.S. Treasuries saw continued demand.
UBS’ Haefele said a worse-case scenario would be disruptions in Russian oil supply, which could further push up oil prices and severely weigh on global economic growth.
The scenario would also ramp up inflation, damaging risk-driven assets, including crypto.
Upcoming U.S. inflation data this week will be another source of volatility for markets. A stronger-than-expected reading could spur further losses on expectations of sharper interest rate hikes this year.
![Hedera [HBAR] looks ripe for an unprecedented recovery thanks to its...](https://digitalcoinnews.com/wp-content/uploads/2022/05/Hedera-HBAR-looks-ripe-for-an-unprecedented-recovery-thanks-to-120x86.jpg)
