The ongoing showdown between Russia and Ukraine has adversely impacted the crypto market, and resulting in a slump to $35K.
The entire crypto market capitalization saw a 9% slump within 24 hours to $1.5 trillion following escalating tensions in Eastern Europe between Russia and Ukraine. The price of Bitcoin (BTC), the world’s largest digital currency by market cap, is currently at the $35K threshold. This is a low last seen before April 2021 when the general prices of digital currencies crashed.
BTC initially dropped to $34,500 owing to a reduction in positive investor sentiment according to the “Crypto Fear and Greed Index”. The metric showed a 2-point drop into “fear” territory to a reading of 23.
The total amount from losses and liquidations on futures tracking digital currencies surpassed $250 million in the Asian pre-trading session. This was because other cryptocurrencies crashed by more than 10% across the board in a relatively short time. For example, in less than a day, Ethereum (ETH) lost 12% of its market cap, while Cardano (ADA) and Solana (SOL) plummeted by 16%.
Traditional Finance System across Three Continents Also Wracked
The fallout from the Russian-Ukrainian faceoff is also affecting stock markets, futures, and indexes across three continents – including the US, Europe, and Asia. However, according FxPro financial analyst Alex Kuptsikevich, these traditional asset classes are still faring better than digital currencies. Kuptsikevich believes that this is to the relatively-perceived ‘newness’ of the crypto asset class. In addition, he also asserted that this underscores just how volatile crypto can be, especially in uncertain times. The analyst also said digital currencies are a poor substitute for gold as an inflationary hedge. According to Kuptsikevich:
“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.”
Touching on the ongoing military strife between Russia and Ukraine, Kuptsikevich asserted:
“The aggravation of tension around Ukraine exerted pressure on risky assets, 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.”
However, in spite of the unsavory crypto market development, Glassnode says that investors continue to hodl BTC. According to reports, BTC whales and long-term investors currently hold a record sum representing 76.5% of the major crypto. This may imply that some investors still believe that Bitcoin is a trustworthy hedge against inflation.
Some Crypto/Financial Experts Proffer Advice on How Best to Deal with the Latest Market Slump
Crypto market experts and analysts are offering suggestions on how best to handle the current situation. Several of them advocate investing only a small amount, one that would not adversely impact one’s overall financial portfolio in the event of a loss. They also suggest that people should refrain from monitoring their investments too closely.
For instance, Humphrey Yang, a personal finance expert, says:
“Don’t check on it. That’s the best thing you can do. If you let your emotions get too much into it then you might sell at the wrong time, make the wrong decision,”
In addition, Bill Noble, chief technical analyst at crypto analytics platform Token Metrics says:
“Don’t panic and puke, if you keep your positions small, you can try to tolerate the volatility.”
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