Why are Cryptocurrencies and Stocks crashing after Russo-Ukrainian Conflict explained

After Ukraine and Russian war, cryptocurrencies and stock market is experiencing a huge breakdown, which has never been experienced before.Why are Cryptocurrencies and Stocks crashing after Russo-Ukrainian Conflict explained This war has affected the world s leading cryptocurrency Bitcoin at large which has plunged down well below than 35000 dollars, along with Ethereum and dogecoin. So, what is happening guys?Let s find out! In this article we are going to talk about why cryptocurrencies are falling after Russian invasion of Ukraine

Bitcoin enthusiasts have long touted the cryptocurrency s value as a safe haven to hedge against inflation and other risks in traditional markets. But hours after Russian President Vladimir Putin ordered his troops to invade Ukraine on Thursday, cryptocurrencies plummeted. The world’s most valuable cryptocurrency fell below $40,000 over the weekend and has continued to slide as the Ukraine crisis intensifies.

According to the data, the currency has lost almost half its value since its November high of $68,990 due to geopolitical tensions, the prospect of interest rate hikes by the US Federal Reserve and curbs by some major economies on digital assets. Bitcoin, the digital asset most often referred to as an alternative to gold, plunged 8% within hours of Russia invading Ukraine, with prices tanking to $34,413 per coin. Along with that, Ether, the native currency of the game-building blockchain Ethereum, has crashed 7% to $2,404 per unit.

Also read : Russo-Ukrainian conflict explained Case Study of Russia vs Ukraine

Etherium crash

Additionally, Ethereum s rival Solana, which is popular among NFT creators, tanked 10% to $83, and Even Shiba Inu, a meme coin which enjoyed logic-defying 49,000,000% growth last year, sank 10%. Apart from the leading cryptocurrencies, smaller cryptocurrencies took an even wilder ride, with XRP plunging 12.6% before recovering to be down just 1.2%. Cardano fell 9.7% before recovering to just 1.0% in the red, while Solana was up 1.9% after having plunged 9.0% in the morning.

According to market tracker CoinMarketCap, the total crypto market lost $160 billion of value in the past 24 hours, plunging 10% since the Ukraine invasion began. However, Bitcoin has been on the roller coaster ride since last year. Over the past year, as more institutional investors piled onto the cryptocurrency bandwagon, the value of Bitcoin and its peers have tracked traditional markets more closely, falling when regular stocks tumble and gaining on broader bullish sentiment.

But of course, crypto isn t the only asset that has tanked on news of Russia s invasion, or even in the buildup to the event, as Europe s benchmark Stoxx 600 index dropped 2% after opening Thursday, while analysts expect the S&P 500 index will trim 7% in weeks to come. But the fact that crypto is falling in lockstep with other assets is counter to Bitcoin s identity as a safe haven. According to Chris Dick, a quantitative trader at crypto market maker B2C2: The correlation between crypto and stocks has been high over the last few months on both inflation-related macro news and the Russia-Ukraine geopolitical situation. This correlation shows that Bitcoin is firmly behaving like a risk asset at the moment not the safe haven it was touted to be a few years ago. In addition to Chris, some industry leaders in the crypto space recognize Bitcoin s gradual integration with traditional markets as a fundamental shift in the coin s value as an asset albeit a shift they can t make sense of yet.

We re probably in a new regime than we ve been in the last year and a half, CEO of crypto marketplace FTX, Sam Bankman-Fried, tweeted Thursday. We ll have to see how things work here. On the flip side, other crypto enthusiasts maintain that the fundamental values of cryptocurrency haven t changed, and that Thursday s slump is an opportunity to #buythedip, encouraging investors to pile into cryptocurrencies now that their prices are low. Vikram Subburaj, CEO of India s Giottus Cryptocurrency Exchange, stated that the current crisis also presents an opportunity to invest in these assets at a lower price. Certainly, Bitcoin might well make a comeback, as it has in the past. Edward Moya, a senior market analyst of the Americas at Oanda, said in a note to clients Thursday that: “many crypto investors have been humbled by the last crash. They are hesitant to increase holdings given the tremendous uncertainty for risky assets,” Moya also predicted that bitcoin would likely continue to “see decent resistance from the $40,000 level as geopolitical tensions will prevent risky assets from mustering up much of a rally.” Cryptocurrency price moves have increasingly become more 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. According to Anto Paroian, chief operating officer at digital asset investment fund ARK36: “The current geopolitical situation will inevitably have an effect on the already elevated prices in the commodities market and aggravate the already-serious supply chain issues which, in turn, could elevate inflation.

This means that the Fed and other central banks may really have no room to reverse their hawkish course and we can expect risk assets and cryptocurrencies to go deeper into the bear market territory.” In addition, during the Russian-Ukraine crisis, Global stocks and US bond yields dived, while the dollar, gold and oil prices rocketed higher as investors scrambled for perceived safe-haven assets. European stocks alone plunged 2.6 percent. “We’ve seen what we’d expect so far – BTC and cryptocurrency markets following stocks,” said Jospeh Edwards, head of financial strategy at crypto firm Solrise Group. “All things tend to correlate in crises, and we’re expecting similar here, so worse is likely to be in store over coming days.” Now let s talk about how the United States is reacting to the war crisis! President Biden on Tuesday afternoon announced new sanctions against Russia as a result of what he called a “Russian invasion of Ukraine,” a response to Russia President Vladimir Putin’s move to send forces into Ukraine’s eastern breakaway regions. Mr. Biden said the sanctions, closely coordinated with allies and partners, will target two large banks in Russia and its sovereign debt. President Joe Biden said 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. The United States and its allies will impose “severe sanctions” on Russia after the attacks, US President Joe Biden said. EU foreign affairs chief Josep Borrell also promised the toughest financial sanctions the bloc had ever imposed. Russia is responsible for 13.6% of the world s cryptocurrency mining, making it the third-largest producer after the US and Kazakhstan, according to data from Cambridge University. On the other hand, Ukraine s role in global crypto mining is negligible. As the Biden administration and European leaders prepare to unveil sanctions against major Moscow financial institutions in response to the invasion, some analysts say the country could further embrace cryptocurrencies as an alternative to the US-dominated global financial system. Therefore, Cryptocurrencies could help Russian companies bypass the big banks when making transactions. Countries subject to US sanctions including Iran and North Korea have used similar measures. Now, not everyone was negatively affected by the war! If we look at stablecoins for instance, which are virtual tokens pegged to traditional currencies such as the U.S. dollar. According to the data revealed, stable coins held gains on Thursday in the midst of a sell-off in risk assets such as stocks and bitcoin after Russia launched a full-scale invasion of Ukraine. Most stablecoins were slightly higher on the day. Their market capitalization was up 0.3% at $182.5 billion, according to cryptocurrency data tracker coinmarketcap.com. According to Joe Dipasquale, chief executive officer at BitBull Capital, which manages crypto funds: “While stablecoins have a much tighter range and less volatility than other crypto assets, in reality their supply is limited. When there is a spike in demand for assets like USDC on exchanges, it’s possible to see their value go up a fraction of a percent, as we’ve seen in the last 24 hours,” So, in conclusion, the Russian invasion has dampened the notion that bitcoin is a safe haven. In fact, the world’s largest cryptocurrency has behaved more like a risk asset. Since the beginning of the year when the Russia-Ukraine crisis started percolating, bitcoin has lost 22% of its value against the dollar. To cope with this, Investors have flocked to Treasuries and the U.S. dollar, and even gold, the asset that has been compared to bitcoin. But perhaps the most damning indictment of Bitcoin s value as digital gold is that while most asset prices have plunged on news of war, real gold actually went up, hitting a 13-month high Thursday, approaching $2,000 an ounce. This is the reason why stable coins held gains during the crisis. However, the major concern for the investors and traders at the moment are those cryptocurrencies that are experiencing continuous loss, and as long as the war goes on, the crypto world will continue to suffer.

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