Summary: The crypto volume against the Russian ruble has tumbled since the first sanctions in late February, highlighting that crypto is not being used much to evade sanctions. What has also tumbled this month are non-fungible tokens volume and floor prices, showing that they are not insensible to global uncertainties.
Russian crypto volume tumbles
For the past weeks, there has been speculation that crypto would be a means for Russia to evade Western sanctions. As we see it, it is unlikely that Russia can seriously evade sanctions using cryptocurrencies due to several reasons namely that carrying out the sanctioned activity with crypto as the medium of exchange instead of fiat does not suddenly make the activity legal. Nevertheless, if one is utilizing cryptocurrencies to bypass sanctions, it should be quite easy to identify and stop it due to the public nature of cryptocurrencies. One more reason is that the Russian crypto market is somewhat illiquid, making it challenging to bypass sanctions to a large degree.
What originally fueled the speculation of the evasion of sanctions using crypto was increased crypto trading against the ruble following the new sanctions in late February. On the 24th of February, Russian volume peaked with crypto worth $70.7mn traded against the ruble. In the first place, this is not much considering the size of Russia. On Thursday last week, the volume was reduced by half with $34.1mn traded against the ruble on that day. In our opinion, this indicates an illiquid market not presently able to facilitate notable evasion of sanctions, no matter whether we are talking $70.7mn or $34.1mn in volume a day.
NFT prices and volume plunges
The crypto trend of 2021 namely non-fungible tokens (NFTs) extended well into January beating the prior all-time high-volume set in August 2021 on the largest NFT marketplace OpenSea with a January volume of $5bn. However, some fatigue started to spread in the NFT market in February, as almost $1.5bn was cut off OpenSea’s monthly volume. When February became March, it seems the February sentiment was likewise carried over to March. The OpenSea volume has solely been slightly more than $400mn month to date, on average around $70mn a day, from an average of $127mn in February. Simultaneously, the floor price has tumbled in Ether across the most popular NFT series such as Bored Ape Yacht Club. With Ether tumbling in USD in March as well, the fatigue in the NFT market has been intensified, indicating that the NFT market is not insensible to global uncertainties on this scale.
‘Crypto Nation’ Switzerland expands
Switzerland has for years been a country with a high concentration of crypto companies and projects. Ethereum was founded in the city of Zug, Switzerland, and the foundation of Ethereum, Polkadot, and Cardano also operate out of Zug, which has been known as Crypto Valley. Another Swiss city now wants to compete domestically with Zug namely Lugano. The city of Lugano plans to make Bitcoin, the largest stablecoin Tether, and the CHF stablecoin LVGA ‘de facto’ legal tender in the city as part of its Plan B in collaboration with Tether. The plan aims to make Lugano a major European blockchain hub.
2024: The wasted year
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Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
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