War in ukraine
Following Russian President Vladimir Putin’s announcement of a military campaign in the Ukrainian area of Donbas, the price of bitcoin fell below $35,000 early Thursday.
According to CoinMarketCap, bitcoin was trading at $34,969 as of 1:22 a.m. ET on Wednesday. Compared to the previous day, this is a decrease of more than 8%. As of 6:30 a.m. ET, the price of a bitcoin had risen to over $35,000, and this article has been updated to reflect the new price.)
US officials say Russia is preparing for an all-out invasion of the Eastern European country, something that would rock global markets and result in stinging sanctions.
Allied nations from Europe and the US plan to announce new sanctions on Russia tomorrow in response to Moscow’s decisions and actions. Russia’s continued aggression towards Ukraine has led to the promise of these sanctions, further casting a shadow over world markets.
Bitcoin Adoption
Budd White, co-founder of cryptocurrency exchange Tacen, said it is difficult to gauge whether Bitcoin will go up or down if war breaks out in Europe.
In part, this is because adoption levels are increasing rapidly, particularly among nation-states and large institutional investors, he added.
Bitcoin, risky asset
Bitcoin is a risky asset class like speculative stocks so whenever there is a lot of uncertainty in the market people want to invest in safer assets which is generally bad for risky assets and can reduce the value of cryptocurrencies .
Adding to the downward pressure on cryptocurrencies and traditional stocks is the addition of the Federal Reserve, which plans to raise interest rates for the first time in years next month.
Last year, as consumer prices rose rapidly, some investors viewed Bitcoin, and cryptocurrencies in general, as a potential hedge against inflation, which is now questioned by some opinions.
Meanwhile, Russia’s confusing policy regarding cryptocurrencies also added to the drop.
The country’s finance ministry said on Feb. 21 that it would take into account proposals on cryptocurrencies from the country’s central bank as long as they do not contradict its own approach, in this case paving the way for legislation governing digital assets.
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