Tensions over Russian troops at Ukraine’s border has rocked crypto markets in recent weeks.
Chris McGrath/Getty Images
Bitcoin
and other cryptocurrencies tumbled Tuesday as investors fled risk-sensitive assets after Russian President Vladimir Putin ordered troops into Ukraine.
Bitcoin, the leading cryptocurrency, was down 5% over the past 24 hours to around $37,000, according to data from CoinDesk. It had been trading hands near $45,000 for much of last week, but plunged below $40,000 on Friday amid heightened geopolitical tensions.
Smaller peer Ether
was less resilient, falling more than 6% to below $2,600. The token underpinning the Ethereum blockchain network began sliding from nearly $3,000 at the end of last week.
Bitcoin and Ether remain well off their all-time highs of $68,990 and $4,865, respectively, which were reached in early November.
Pain was more pronounced among smaller cryptos or “altcoins” including Solana, Cardano, and Litecoin, which were all down around 10%. Widely popular “meme” tokens Dogecoin
and Shiba Inu fell 8% and 10%, respectively.
Investors across asset classes have been on edge for weeks over the threat of an imminent invasion of Ukraine. Russian troops have been massing at the country’s borders amid Moscow’s objections to Ukraine’s possible membership in NATO, the Western defensive alliance.
The picture darkened on Monday as Putin recognized two breakaway regions in Eastern Ukraine—already controlled by separatists—and ordered troops into the area. In response, President Joe Biden signed an executive order restricting U.S. business with the breakaway regions, and wider sanctions are expected to follow globally. The invasion of Ukraine “has begun,” U.K. cabinet minister Sajjid Javid said Tuesday.
“Bitcoin’s safe haven narrative has almost completely fallen apart as the rising possibility of military conflict and the worsening U.S.-Russia relationship puts the wider financial market in risk-aversion mode,” said Yuya Hasegawa, an analyst at crypto exchange Bitbank.
In theory, Bitcoin and its peers should trade independently from mainstream financial markets, and a key argument for Bitcoin is that it is a digital version of traditional safe haven asset gold.
However, cryptocurrencies have shown themselves to be correlated closely with risk-sensitive equities—such as tech stocks—and have declined sharply this year in parallel amid geopolitical tensions and the prospect of rising interest rates.
“Bitcoin could be the victim of a scramble for cash,” Edward Moya, an analyst at broker Oanda, said late last week. “But once that panic selling passes, long-term bets would quickly return. [Long-term holders] may be tested shortly.”
Write to Jack Denton at [email protected]
