Cryptocurrency prices plunge as Ukraine crisis intensifies
The price of major cryptocurrencies is slumping as the conflict between Russia and Ukraine escalates. Bitcoin fell to $36,370 on Tuesday after being as high as $44,125 a week ago, while other popular digital coins, including ethereum and solana, have also tumbled recently.
Analysts said the declines show that cryptocurrencies are a poor choice for investors seeking stability in periods of market turmoil, in contrast to traditional hedges against risk like gold and U.S. Treasury securities.
"Bitcoin's safe haven narrative has almost completely fallen apart as the rising possibility of military conflict and the worsening U.S.-Russia relationship puts the wider financial market in risk-aversion mode," Yuya Hasegawa, a crypto market analyst for Bitbank in Japan, said in a research note.
Stocks have been falling on Wall Street as investors sought refuge from the turbulence caused by the conflict in Ukraine. The price of gold rose to $1,907 an ounce on Tuesday, its high for the year. Investors are also flocking into U.S. government bonds, driving up Treasury prices while pushing down their yields, which move in opposite directions.
"Bitcoin is the ultimate risky asset, and a Ukraine invasion would keep crypto selling pressure going another 10 percent to 15 percent over the short-term," Edward Moya, senior market analyst at Oanda, said in a recent report.
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.