Cryptocurrencies recovered their losses along as equities turned higher, as investors continued to assess the crisis in Ukraine.
Bitcoin climbed 5% higher to $39,509, according to Coin Metrics. Ether gained about 4% to trade around $2,715.
Early in the day, bitcoin dropped more than 8% to touch $34,702.18, marking its lowest level in a month and falling below a key support level, according to Katie Stockton from Fairlead Strategies. She also said the down move could exhaust itself by the day’s end and give way to two or more weeks of stabilization.
President Joe Biden said in an afternoon press conference that the U.S. will introduce another wave of sanctions against Russia that would limit its ability to do business in dollars, euros, pounds and yen, in an effort to isolate Moscow from the global economy.
Cryptocurrency price moves have increasingly become more highly correlated to movements in other risk assets like stocks, as institutional interest builds and more short-term investors trading bitcoin like other risk equities have entered the market.
“The prospect of geopolitical escalation has been the main driver of price moves in the broader risk asset spectrum for the past couple of weeks,” said Anto Paroian, Chief Operating Officer at digital asset investment fund ARK36. “Now that the war between Russia and Ukraine has become reality, investors are rushing to take risk off the table and stock markets globally are seeing major declines.”
The U.S. and the U.K. have slapped sanctions on Russian banks, individuals and the country’s sovereign debt. The European Union will hold an emergency meeting on Thursday and could reportedly unveil further sanctions on Russia.
Cryptocurrencies have been under pressure since bitcoin hit a record high of nearly $69,000 in early November. Since then, bitcoin has fallen nearly 50%.
Ayyar said that bitcoin could see lows at around $30,000 mark with the key level being the low of between $28,000 and $29,000 seen last July.
If bitcoin manages to hold above that, then it could move to new highs later this year, Ayyar said. But he added that if the price falls below that, then bitcoin could move to the low $20,000 mark.
—CNBC’s Ryan Browne contributed reporting.
