UPDATE February 24 2022, 4:05pm ET: Bitcoin and crypto prices rebounded shortly after the publication of this article but markets remain unpredictable.
The crypto market tumbled by a staggering 9% on Thursday, with a market capitalization of all cryptocurrencies sliding to as low as $1.5 trillion within the past 24 hours, following what Russian President Vladimir Putin dubbed a “special military operation” in Ukraine.
The largest cryptocurrency, Bitcoin, fell below $35,000 USD — constituting a loss of value of nearly 11% within a single day since Russian forces made their way into Ukraine’s eastern provinces, falling to a one-month low.
The plunge followed a nosedive of traditional stocks, with investors seeking safer assets as the conflict ramps up. Losses on crypto-tracked futures reached over $250 million in early Asian hours.
Other major cryptocurrencies also took a nosedive, with Ethereum falling by over 10% to $2,350 and Cardano to $0.75. Solana also fell by as much as 16%. All tokens regained some ground by midday.
Bitcoin has since recovered to above $36,000 USD, but the latest hit to crypto follows a week of declines, with Bitcoin losing more than 20% of its value. According to CoinDesk, the “fear and greed index,” a tool used to calculate public sentiment of the crypto market, fell two points to a “fear” level reading of 23.
“The aggravation of tension around Ukraine exerted pressure on risky assets,” said Alex Kuptsikevich, a financial analyst at FxPro said, per CoinDesk. “There are growing risks of escalation associated with the introduction of Russian troops into Donbass. In such a situation, risky assets may continue to decline further.”
The immediate plunge in cryptocurrencies shows that Bitcoin, despite its many bullish advocates, remains a nascent asset class in comparison to traditional markets, which took less of a hit.
“We see that cryptocurrencies are selling stronger than developed world stocks, confirming the risky nature of these assets and how they are not a replacement for gold,” said Kuptsikevich.
“The prospect of geopolitical escalation has been the main driver of price moves in the broader risk asset spectrum for the past couple of weeks,” said Anto Paroian, chief operating officer at digital asset investment fund ARK36, per CNBC. “Now that the war between Russia and Ukraine has become reality, investors are rushing to take risk off the table and stock markets globally are seeing major declines.”