Following Russia's attack on Ukraine, bitcoin falls to a one-month low as part of a broader cryptocurrency sell-off.
- After Vladimir Putin ordered "special military action" in Ukraine, bitcoin plummeted to its lowest level in a month on Thursday.
- As a result of allegations of Russian attacks on Ukrainian cities, investors panicked and sold hazardous assets, according to an expert.
- The decrease in crypto on Thursday, according to FTX's Sam Bankman-Fried, is due to algorithmic trading.
Following Vladimir Putin's command to strike Ukraine on Thursday, Bitcoin fell to its lowest level in a month, coupled with a broad decrease in other cryptocurrencies.
Reports of explosions and flames emerged from at least five locations across Ukraine, including the capital, Kyiv, within minutes of Putin's televised decision to unleash a "special military strike" against Ukraine.
Bitcoin has dropped 9% to $34,584 and ether has dropped 13% to $2,315, according to CoinMarketCap data. Each of Ripple's XRP, Cardano's ADA, Dogecoin's DOGE, and Avalanche's AVAX has dropped more than 15%.
The escalation of the confrontation between Russia and Ukraine has caused concern in the stock and cryptocurrency markets, signifying a rise in risk aversion.
Markets awoke in panic mode as investors reacted to the news overnight, according to Walid Koudmani, chief market analyst at financial firm XTB. He claims that his clients are selling hazardous asset classes in favour of gold and the US dollar, which are viewed as safer investments in uncertain times.
"Investors despise ambiguity, and while the West will undoubtedly respond to Russia's aggressiveness, what's unclear right now is the degree of the response and how the situation could worsen," he said.
"As a result, investors are looking for asset protection and don't want to put their investments at danger."
The decrease in cryptocurrencies on Thursday, according to FTX CEO Sam Bankman-Fried, could be the effect of algorithmic trading, a technique that makes trade decisions based on pre-determined instructions.
In a tweet, he added, "Fundamental investors are unsure which direction BTC/USD should travel." "Data is consulted by algorithm devotees."
Investors have been wary of crypto markets in recent days as they examine the violence in eastern Europe, as well as macroeconomic uncertainties.
Will Hamilton, the head of trading at Trovio Capital Management, noted that crypto investors may be seeking out buying opportunities at this time.
On Wednesday, the Digital Asset Fear & Greed Index, which uses a range of indicators to determine market risk appetite, including volatility, momentum, volume, and media opinion, retraced to the "Extreme Fear" level, indicating a potential buying opportunity for high conviction participants, he said.
When bitcoin prices fall, John Warren, CEO of bitcoin miner GEM Mining, agrees that investors should look for attractive buying opportunities.
Nonetheless, recent huge swings in crypto prices have cast doubt on the idea that bitcoin is a hedge against economic uncertainty. On Thursday, safe-haven gold climbed 1.6 percent to $1,942 an ounce, its highest level since early 2021.
After Ukraine announced a state of emergency and the US warned Russia was on the verge of an attack, the S&P 500 plummeted 1.8 percent at the closing on Wednesday. Following Putin's announcement of a military action in Ukraine's eastern Donbas region, worldwide stock markets began to plummet. In European trading, S&P futures were down about 2%.
If the situation in Ukraine worsens, which appears to be unavoidable, bitcoin might fall below $30,000 as investors seek safe-haven assets, according to Koudmani.