Market Wrap: Cryptos and Stocks Rise on Possibility of Russia-Ukraine Talks

Bitcoin (BTC) and other cryptocurrencies rose on Friday after Russia agreed to negotiate with Ukrainian officials.

"Vladimir Putin is ready to send to Minsk a Russian delegation," Kremlin spokesman Dmitry Peskov told reporters on Friday. Still, the situation was unstable, especially after Russian forces intensified attacks on Ukraine’s capital in recent days. The Russian president later made comments suggesting that he was not serious about participating in talks.

Meanwhile, global markets were in a state of flux as investors tried to make sense of geopolitical moves. The S&P 500 stock index rose over 2%, while Russia's ruble ticked higher, albeit near its weakest level on record.

In crypto markets, bitcoin underperformed most alternative cryptocurrencies (altcoins) on Friday, suggesting a greater appetite for risk among investors. BTC was roughly flat over the past 24 hours, compared with a 5% gain in XRP and a 10% rise in Terra's LUNA token over the same period.

Some investors expect the rebound in crypto prices to continue because of the spike in volatility. Bitcoin's one-week implied volatility jumped to an annualized 75% on Thursday, topping the one-, three- and six-month gauges, similar to what occurred after the May 2021 crash. Further, bitcoin's inverted volatility structure typically precedes price bottoms, according to CoinDesk's Omkar Godbole. Implied volatility refers to investors' expectations for price turbulence over a specific period.

Volatility spikes can be short-lived, however, which could delay a significant upswing in BTC's spot price.

"These spikes in spot price would probably be met with aggressive spot selling, capping the topside," QCP Capital, a Singapore-based crypto trading firm, wrote in a Telegram announcement this week.

●Bitcoin (BTC): $3,9093, +2.28%

●Ether (ETH): $2,710, +2.66%

●S&P 500 daily close: $4,385, +2.24%

●Gold: $1,892 per troy ounce, −1.73%

●Ten-year Treasury yield daily close: 1.99%

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.

Similar to volatility, bitcoin's trading volume across major exchanges reached the highest level since the Dec. 5 price crash, according to CoinDesk data. Typically, high-volume sell-offs indicate capitulation, which could lead to short-term price jumps.

Over the past 24 hours, the ratio of buy volume relative to sell volume was slightly higher, indicating bullish sentiment among traders, according to data compiled by CryptoQuant.

Still, trading volume has trended lower over the past few months.

"Consumer volumes on the exchange remain tepid despite large moves in the crypto space, suggesting reduced risk appetite and light overall positioning in markets," David Duong, head of institutional research at Coinbase, wrote in a Friday email to clients.

Coinbase reported its fourth-quarter earnings on Thursday, which beat revenue estimates. However, the exchange warned shareholders about high volatility, and stated that trading volumes could decline during the first quarter of this year.