Bitcoin and other major cryptocurrencies have crashed after Russia launched a full-scale invasion of Ukraine.
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The bitcoin price has plunged under $35,000 per bitcoin, down almost 10% over the last 24 hours, while other top ten cryptocurrencies ethereum, BNB, solana, cardano and XRP have suffered similar falls.
Crypto’s latest price crash means an eye-watering $500 billion has now been wiped from the combined crypto market in just one week, reducing it to levels not seen since last summer.
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Bitcoin’s crash in the face of mounting geopolitical tensions between Russia and Ukraine has degraded its reputation as “digital gold” and a safe haven for investors in times of crisis.
“Bitcoin is performing in lock step with other so-called ‘risk assets’ as Russia’s invasion of Ukraine sends global financial markets into a tailspin,” the trading team of the bitcoin and crypto exchange Bitfinex wrote in an emailed note. “Markets across the board are dancing to the tune of geopolitical events.”
Alongside the bitcoin and crypto price collapse, the price of oil has surged past $100 a barrel, the highest levels seen by the international benchmark Brent crude futures in more than seven years. Gold, the traditional safe haven for investors in times of high risk, has also soared higher in recent weeks.
The U.S., U.K. and some of their allies have already imposed a series of economic sanctions on Russia with more expected in response to Russian president Vladimir Putin launching a “special military operation” in the eastern Donbas region of Ukraine overnight.
The bitcoin price has soared over the last two years, climbing almost 300%, along with global stock markets as the Federal Reserve flooded the system with cash in order to offset the economic damage wrought by the Covid-19 pandemic and subsequent lockdowns.
However, the bitcoin price peaked in November last year at almost $70,000 and has now lost 50% of its value as the Fed gears up to hike interest rates for the first time in Covid-era and cut back its huge stimulus measures. Smaller cryptocurrencies such as ethereum, BNB, solana, cardano and XRP have largely outpaced bitcoin’s rally over the last two years.
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Bitcoin and crypto market watchers are nervously eyeing the falling price of bitcoin, ethereum and other cryptocurrencies, but many remain upbeat about bitcoin’s longer-term prospects.
“I do believe the bleeding will continue, but I also think we are getting near the end. One thing I can safely say is that bitcoin is cheaper at $38,000 than it is at $69,000. It had dropped to under $34,000 a few weeks ago,” Alexandre Lores, director of blockchain market research at research group Quantum Economics, wrote in emailed comments, adding he is still “bullish on bitcoin and decentralized digital assets in the long-term.”
“In January, I did predict certain factors would cause selling pressure,” wrote Lores, pointing to action Federal Reserve policy makers would take to combat inflation.
“What I did not predict was the Russia/Ukraine tensions, which have created selling pressure across global markets, which includes crypto, as well as the S&P 500, which has fallen more than 10% from the all-time closing high it reached January 3, therefore entering correction territory.”