Since Russia unleashed a war on Ukraine, the majority of cryptocurrencies crashed big time. Many financial sectors suffered, too, but cryptocurrencies were affected the most. The Ethereum price declined to roughly 30% since January 1.
What does this imply? Do current events affect such movement? Let us discover.
The Plunge
Along with ETH price, the Bitcoin price also plummeted approximately 8% (February 24). However, it is a good sign for several crypto analysts since their predictions state that global disruptions would bring a price hike.
However, Bitcoin, Ethereum, and other crypto-assets crashed due to the Russia-Ukraine conflict. Recently, the downturn cost the cryptocurrency market to lose $1.75 trillion as per Coinmarketcap.
With that being said, trading volumes skyrocketed. For example, last Thursday (February 24), trading activity increased by 45%.
The State of Global Financial Market
Financial markets such as commodity prices and shares suffered too.
Several conventional benchmarks in Asia and Europe decreased by 4% since traders are trying to figure out the damage of Putin’s incursion. Meanwhile, Wall Street futures sagged suddenly by a 2.5% daily margin.
As the president of the European Union, Brussels stated that the 27 countries planned their response to Russia’s offensive attack. They wanted to make Putin accountable for this occurrence.
Last Saturday (February 26), the United Kingdom, the European Union, the United States, France, Canada, and Italy released a joint statement that they would punish the central bank of Russia. In addition, they decided to ban Russian banks from SWIFT messaging systems. This system is specifically tailored for trillions of dollar transactions globally.
This move will keep the Russian Central bank from using its international reserves, affecting its sanctions. According to speculations, Russia owns roughly $300 billion offshore foreign currency. As per the Credit Suisse report, this amount can drastically impact money markets once frozen by sanctions.
Ethereum, Bitcoin, and other crypto prices had recuperated last weekend since traders came along with the terms with the said sanctions. But it has been said that the recent measures may provoke fresh volatility together with inflation fears and high commodity prices, mortifying investors.
On the other hand, Russia’s attack was intended to provide protection for civilians located in eastern Ukraine, according to Putin. Contrary, this statement is justifying the said invasion as per West.
Alex Kuptsikevich, the senior financial analyst of FxPro, stated that if the situation in Ukraine escalates, even more, Bitcoin may decline below $30,000 since investors leave for defensive assets. He added that otherwise, Ukraine would not survive the growing sanctions pressure from Western countries.
What does this mean for investors?
What’s intriguing here is crypto-assets being the alternate and shadowy economy. However, its reputation is being challenged cautiously with the crypto market’s response to different world events.
It cannot be denied anymore that crypto trading and assets are more mainstream these days. Financial and public institutions feel safer with trading and investing. Hence, it is pretty good to see how they respond to significant world affairs.
The conflict is changing rapidly, but we suggest that you stay updated but do not panic.
Although Ukraine-Russia will surely dominate near-term headlines, keep in mind that it won’t identify the medium and even longer-term crypto market. Yes, the market doesn’t like any escalation or even trust whatever settlement between these parties unless Russia releases their troops around Ukraine.
Steve Clayton, HL Select fund manager, revealed the possible portfolio losers in banking sectors. This is mainly because of the sanctions. However, it is worth pointing out that cautious business owners and consumers will avoid borrowing when tension escalates unless they feel safer and more confident. By that, we can say that it will significantly affect banks.
Moreover, leisure and travel stocks will decline since customers tend to stay at home during a crisis. This could still be unpredictable with crypto since, aside from global events, other factors may affect their movement. Hence, make sure to keep out, calm your nerves and do your homework.
Final Thoughts
With such an extensive range of virtual coins in the market, it can be quite challenging to hold up against recent fluctuations. But as long as you are equipped with the right information and resources, you can plan ahead of time and do away with the stress associated with cryptocurrencies.
This way, you will get the chance to reap all of its benefits, something that would otherwise be impossible if you were not well informed.
Bitcoin, Ethereum, and the likes have been a hot topic of discussion. However, at this point, they are not going away anytime soon. If you haven’t invested in these digital assets yet, there is still time to get on the bandwagon. With knowledge comes power, so do your research before investing in any of these volatile digital currencies.
