Bitcoin fell to its lowest point in a month, along with a wide decline in other cryptocurrency after Vladimir Putin ordered Russian troops to attack Ukraine.
Within minutes of Putin’s broadcast decision to launch an’special military operation’ against Ukraine’, there were reports of flares and explosions from at least five locations within the country, including Kyiv.
According to data from CoinMarketCap, Bitcoin dropped 9% to $34,584 while ether fell 13% at $2,315, Ripple’s HTMLRP plunged more than 12%, while cardano’s ada fell by more than 12%.
The escalating conflict between Russia and Ukraine has prompted fear on the stock and cryptocurrency markets. This signals a growing risk aversion.
According to Walid Koudmani (chief market analyst at financial brokerage XTB), markets woke up panicked as investors reacted to news overnight. His clients are selling off risky asset types to purchase gold or the US dollar, which are safer investments in times of uncertainty.
“Investors hate uncertainty” and while it is inevitable that Russia will respond, it is unclear at this point how severe and how quickly the situation could escalate, he stated.
“Investors are looking for asset protection and don’t want to take any risk to their portfolios.
Chief executive of FTX Sam Bankman-Fried suggested that Thursday’s drop in cryptocurrencies could be due to algorithmic trading. This is a process where trade decisions are made based upon predetermined instructions.
In a tweet, he stated that fundamental investors are unsure which direction BTC/USD should go. “Algorithm enthusiasts consult the data.”
The Crypto markets were on edge recently as investors evaluated conflict in eastern Europe and macroeconomic uncertainty.
Trovio Capital Management’s Head of Trading, Will Hamilton, suggested that crypto investors might be looking for buying opportunities right now.
He said that the Digital Asset Fear & Greed Index, which uses a variety data such as volatility, momentum, volume and media sentiment to determine market risk appetite, retraced back to the Extreme Fear’ level Wednesday. This indicates a potential buying opportunity to high conviction participants.
John Warren, CEO at GEM Mining, a bitcoin miner, agreed that investors should look out for good buying opportunities during crypto dips.
However, recent swings in crypto prices have undermined the argument bitcoin is an hedge against economic uncertainty. On Thursday, safe-haven gold rose 1.6% and reached $1,942 per ounce – its highest level since early 2021.
After Ukraine declared a state emergency, the S&P500 fell 1.8% on Wednesday’s close. The US also warned Russia that it is at the brink of attack. After Putin’s announcement of a military operation in Ukraine’s eastern Donbas, a collapse in global stock prices occurred Thursday. S&P futures fell almost 2% in European trading.