By FintechNews staff
Russia’s invasion of Ukraine sent shockwaves around the world. The attack drew condemnation from many world leaders, and many governments quickly introduced sanctions against Russia and sent aid to Ukraine.
After briefly rallying to new highs on the back of the Russian invasion of Ukraine, the value of digital assets like Bitcoin and others has recorded massive losses.
Cryptocurrency prices fell on Monday amid a raging war between Russia and Ukraine. World’s largest cryptocurrency, in terms of market capitalization, Bitcoin slipped below $38,000 levels.
Other top ten digital assets by market cap like BNB, Solana, Cardano, Avalanche, and even high flying Terra lost above 3% of their value. Cryptocurrency market capitalization tumbled below $2 trillion mark.
There are at least 2 main factors that explain these falls:
1) Stronger regulation:
Following the economic sanctions imposed on the nation, as well as the recent launch of ‘KleptoCapture‘ by the U.S. Department of Justice and the Biden Administration, some market experts still believe the country can evade many of these sanctions through the use of crypto. This has certainly led to fears of harsher crypto regulations.
While potential new regulatory developments in the U.S. have previously been a source of crypto market volatility without amounting to much, it looks like some major changes could be coming soon. According to a report from Bloomberg, President Joe Biden will sign an executive order this week that will direct federal agencies to research potential regulations for cryptocurrencies, and the development is triggering sell-offs.
2) No safe heaven asset:
With the world’s heightened uncertainty, many investors expected bitcoin to behave like a safe-haven asset, similar to precious metals. After all, bitcoin has gained a reputation as digital gold, in which case it should be a hedge for investors during these tumultuous times. Yet bitcoin has given investors little protection from the fear that has gripped the economy amid the war in Ukraine, sky-high inflation, and the threat of rising interest rates.
Bitcoin is growing up and trading more like a risky tech stock such as Google than digital gold, as pointed out by trader PlanB on Twitter. The theory isn’t too farfetched, considering that Google parent company Alphabet’s stock has sunk 11.5% year-to-date compared to bitcoin’s 15% decline in the same period.
