Impact of Russia Ukraine War on Cryptocurrency Market
Currently, there is a major macro factor playing out i.e The War between Russia and Ukraine and it is creating huge volatility in crypto markets, and cryptocurrencies prices are going up and down very quickly with every important news. This article will cover how this War has impacted Cryptocurrency markets.
On Thursday morning, when Russian President Vladimir Putin announced on television a 'special military operation' to complete Ukraine's 'demilitarisation.' Bitcoin, the world's most popular cryptocurrency, plummeted almost 8% to $34,932.07 while Ethereum, the second-largest cryptocurrency by market capitalization, lost nearly 10% of its value, falling to $2,376.19.
It's not just the cryptocurrency markets that fell. Stock Markets also took a fall. The Dow Jones Industrial Average fell 1.38 percent, taking the stock market farther into correction territory. The Nikkei was down 1%, and China's Hang Seng Index was down nearly 2%.
Investors and traders were in fear, and there was panic selling after Putin announced War. Prices dropped a lot, but the market had a relief bounce when President Joe Biden said in a press conference on Thursday that the U.S. will introduce another wave of sanctions against Russia that would limit its ability to do business in dollars, euros, pounds, and yen, to isolate Moscow from the global economy.
The market took Biden's announcement of sanctions against Russia as a bullish event. As a result, Bitcoin's closing price on Thursday was $38,327, and Ethereum closed around $2,596. The dip was bought by traders & investors, Biden's announcement led to more certainty on global markets, and it acted as a bullish catalyst.
Bitcoin and other cryptocurrencies were very volatile on February 24. Putin's announcement of War acted as a bearish catalyst for the market, resulting in a massive drop in prices of cryptocurrencies because the market doesn’t like uncertainty. In contrast, on the same day, Biden's announcement of sanctions on Russia was taken as a bullish sign by the market, which resulted in bitcoin and other major cryptocurrencies forming a green candle on the charts.
These instances show how much cryptocurrencies prices are sensitive to change in macro environments. The cryptocurrency market is always the first to react to such news as it is the freest, globally traded market.
This is not surprising as the War continues, and multiple scenarios are still possible. Crypto markets will likely remain highly volatile in this environment, and traders should be ready for fast moves.