Following Russia’s invasion of Ukraine, the value of Bitcoin and other cryptocurrencies has plummeted.
The ongoing conflict between Russia and Ukraine has had an impact on the flow of currency between the world’s nations. Russia, as a key player in the global economy, has severely disrupted trade and triggered sanctions from nations around the globe. Here are some of the effects of President Vladimir Putin’s declaration of war on Ukraine on the cryptocurrency market:
Depreciation of Cryptocurrencies
In just two hours following the invasion of Ukraine, the crypto market cap fell to $1.58 trillion, the lowest level since August 2021, when Bitcoin’s value fell by 5.6 percent to $34,958, and Ethereum’s value fell by 7.7 percent to $2,382.
According to CNN, Bitcoin’s value had dropped by more than 8% to $34,969 in just one day after Putin’s announcement on early Thursday. Many other coins’ values had dropped by an estimated 15%. The Dogecoin, which had lost 15% in the first 24 hours, has now lost 25% in the week following the invasion. Ethereum, which had lost about 12% in 24 hours, is now down by 24% when compared to the previous week’s price. Binance coin, Solana coin, Ripple’s coin, and Polkadot coin lost 23%, 19%, 24%, and 14.49 % in seven days, respectively. Bitcoin fell by 21% during the same time period.
Terra (LUNA) had the best week, losing only 7% in the last seven days. A day before Putin’s announcement, the currency had seen the greatest gains (13 percent) among trendsetters.
Attempts at Retaliation
Traders took a counter-trend move, recouping some of the losses suffered earlier in the day following the sudden drop. In response to Putin’s declaration, US President Joe Biden announced new sanctions that would bar Russia from trading in the US Dollar, Euro, Pound, and Yen.
Later that day, bitcoin’s value increased by 1.7% to $38,262.21. Ethereum, on the other hand, increased by only about 0.2% to $2,631.50. Experts predict that if the war does not escalate further, the values will stabilize in about two weeks.
Containing the Situation
The drop in the value of cryptocurrencies has attracted a group of short-term investors looking to profit from the trend. As global economies increasingly embrace cryptocurrency technology, the value of cryptocurrencies is adjusting to market swings in other risk assets such as stocks.
The US is attempting to exclude Russia from global trade in order to lessen its negative impact on the price trends of other assets. The United States and its NATO allies have unanimously imposed even harsher sanctions in an effort to deter Russia from further military activities that could exacerbate the situation.
Prospects for the Future
The most recent drop is part of a 50% decline since November when Bitcoin reached an all-time high of $69,000. The political unrest has come at a critical juncture in the global economy’s development. This is only after a significant disruption in the supply chain and a surge in commodity prices, both of which can lead to massive inflation.
According to experts, continuing the offensive against Russia’s economy will only exacerbate the situation. However, neither Russia nor NATO are likely to withdraw first. Furthermore, central banks’ warlike approach has already set in motion an irreversible chain reaction that will see cryptocurrencies and high risk assets fall even further.
Bitcoin Trends and Forecasts
Administrators in the cryptocurrency market now expect bitcoin’s value to fall. The plunge could possibly reach levels lower than last year’s record of between $28,000 and $30,000. The expected minimum price could be as low as $20,000.
However, if the coins manage to hold above last year’s minimum, there is a good chance that the value will reach a new high before the end of the year.
Despite the fact that the resistance has put up a fight, Russia has made it clear that it has no intention of retreating. Western heavyweights have also refrained from actively participating in the fight, fearing that it will escalate to the point where a full-fledged war is unavoidable.
Nonetheless, the resilience of cryptocurrencies in previous crises has demonstrated that they are here to stay. Furthermore, the rapid depreciation of the Russian Ruble may force future business owners to use cryptocurrencies. If Russia decides to ration its exports to the West, it may cause another currency value disruption, forcing more countries to adopt cryptocurrencies.