Bitcoin (BTC) and other major cryptocurrencies showed muted gains on Tuesday as the European Union (EU) said it will issue bonds due to the ill effects of the war in Ukraine and sanctions imposed on Russia.

The proposal could be ready next week to finance EU members, with the proceeds said to be earmarked to finance spending on energy and defense.

Reports of the proposal pushed European equities higher. Germany’s DAX index rose 0.7% and the Stoxx Europe 600 index added 0.5%. S&P 500 futures opened 0.38% higher, while futures on silver continued Monday’s run to add 2.68%.

Bitcoin held above the $38,000 for a second day, remaining 12% below the levels it reached a week earlier. Ether lost 1.3% over the past 24 hours, while growth in other majors ranged to 3.1% on Binance Chain’s BNB from 1% on Terra’s LUNA. Avalanche’s AVAX and XRP saw 1% losses in the same time frame.

Traders defended the $38,400 support level for Bitcoin. (TradingView)

On Monday, Brent crude pushed past $122 a barrel on concern Russian sanctions would limit oil imports. Russia is a leading producer, and has said it will cut off natural gas supply to Germany should the country comply with sanctions imposed by other western states. The EU gets about 40% of its gas and 30% of its oil from Russia, according to the BBC.

The London Metal Exchange suspended trading in nickel after a purported short squeeze drove prices of the metal to a record $101,000 in early Asian hours.

“Those that had bet against the metal’s rise in value have now been forced to buy at a much higher price, creating a short squeeze,” explained Susannah Streeter, an investment analyst at Hargreaves Lansdown, in an email to CoinDesk. “It’s likely a big margin call prompted the suspension of trading, with sharp gains forcing speculators to scramble for additional capital to put into accounts to cover the shortfall.”

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Nickel is a key component in electric vehicle batteries, a sector that has grown alongside cryptocurrencies in the past few years.

Tuesday’s gains in crypto added 1.1% to the total market capitalization. The Bitcoin Dominance Index rose to 42.4%. The Fear and Greed Cryptocurrency Index – a sentiment tracker – lost 2 points to 21 in a day and remains in a state of “extreme fear,” suggesting an increase in crypto prices could be expected in the coming weeks.

Story continues

Bitcoin started the week with a decline alongside other risky assets on reports of intensified hostilities in Ukraine. Monday evening, however, saw it recover from losses.

Data on analytics tool Santiment showed large investors were piling up Tether’s USDT tokens during the weekend’s decline of bitcoin. Large USDT reserves could signal buyers are readying to purchase bitcoin, which may become underpriced after last week’s drop, analysts from FxPro told CoinDesk in an email.

Not everyone is convinced of a move upward, however.

"We are looking at a highly volatile market at the moment due to the geopolitical situation we are witnessing in Europe,” shared James Wo, founder of crypto fund DFG, in a Telegram message. “We expect that markets will continue with rapid and deep upside/downside movements, similar to the risk assets in traditional finance, until there are signals of a reestablishment of a new status quo.”

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