Stock pare losses, bitcoin breakout

US stocks clawed back losses as investors prepared for a massive economic downfall for Russia now that the Western nations are intensifying sanctions. Wall Street finished in the red as Russia’s financial meltdown led to some contagion worries and as surging commodity prices will continue to fuel inflationary pressures that will lead to growth concerns later this year.  It is nearly impossible to be aggressively bullish given the geopolitical uncertainties and continued upward pressures with inflation.

All eyes remain on the war in Ukraine and every move Russia makes.  The Russian Central Bank (CBR) decided that the Moscow stock exchange would not resume stock trading tomorrow. Intensifying sanctions will likely be debilitating for Russia’s economy and banning transactions with the Russian central bank, foreign ministry and sovereign wealth fund is just the start of the West’s hardline.

FX

Russia is trying to prevent the rouble from another plunge.  The rouble plunged when trading started this week as the latest round of sanctions were much more hard-hitting than the first ones.  It is hard to get out of a rouble position after President Putin’s ban on Russian residents from transferring FX abroad and the US banning transactions with the Russian central bank. The rouble will remain a rollercoaster ride, but the risks are elevated that Russia’s currency could see further pain if FX markets want to be against the Russian central bank.

Even the Swiss have abandoned their traditional neutral stance and will abide by the Russian sanctions. Crude prices are consolidating just below the USD 100 level, but once we are beyond the OPEC+ meeting and have a better handle of Iran nuclear deal talks, bullish momentum should return.

Cryptos rally on SWIFT sanctions

Western allies are delivering harsher sanctions and restrictions on Russian banks and that is bolstering the argument for blockchain products that will compete with the SWIFT network. Bitcoin and all the top altcoins are rallying today as investors realize the likelihood of massive investments into DeFi following the latest round of Russian sanctions.

The White House and Treasury are also looking to make it harder for Russians to use crypto to get their money out of Russia.  The fact is that some Russians have already done that and now they will be stuck hodling until sanctions are removed, because they don’t want to risk getting caught and losing their entire crypto investment.

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