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Crypto Price Down as Ukraine Crisis Hits

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Bitcoin traders woke to yet more shock Monday morning as the price of the asset tumbled to further localised lows.

At time of press, the price of the world’s number one digital asset sat at $33,728 – a fall of 5.52% in the last 24 hours. However, with the price of Bitcoin bottoming at $33,243 at 11:09 UTC this morning the current price shows that there are buyers at this level but as you may well imagine traders and investors are treading with extreme caution. 

Bitcoin wasn’t the only crypto to experience a devastating fall in value. The entire market also dropped sharply and currently stands at $1.54 trillion representing a fall of 7.01% in the last 24 hours.

Outside factors

With market and network fundamentals at their strongest in years many investors are looking for outside factors as the reason behind the latest market crash. Tensions between Russia and NATO led allies continue to simmer over a Russian military build up at the Ukrainian border and while Russia insists it has no plans to invade, the USA and the UK have already told their embassy staff to begin making plans to leave the country. In contrast, the EU have no plans to fly diplomats out of Ukraine and is at a loss to explain why the USA and UK have given the green light adding ‘the US has not given any clear justification for its decision’.

As we reported on Friday, cryptocurrency and digital assets are still seen by many as risk-on investments which in times of uncertainty are often the first to be sacrificed, regardless of market strength.

However, there are other angles at play in this situation which many in the crypto community believe are having an impact on market activity. The US have threatened Russia with economic sanctions which will ‘bring the country to its knees’ should the country decide to stage an invasion of Ukraine. In practical terms this means deactivating Russia from the SWIFT network which has been used by every nation state to transfer capital around the world since 1972.

‘Alternative rails of finance’

In retaliation to the threat from Joe Biden, Russia have spoken of using ‘alternative rails of finance’ which many people believe is a nod toward distributed and decentralised networks able to move large amounts of capital such as Ripplenet or Stellar Lumens. However, with both of these firms originating in the US it is hard to believe Russia would choose to adopt their services. That being said the nature of many cryptocurrency networks is borderless and the vision they hold for the future is one of harmonious trade with drastically reduced friction in terms of policy, regulation and cost.

The last thing the world needs right now is yet another conflict and personally speaking I don’t think that is going to happen. I do believe however that a movement away from out of date and weighted legacy payment systems such as SWIFT towards the large scale use of decentralised and distributed networks that enable a fairer and balanced global economic environment is only a matter of time. However what time frame this financial transformation occurs on is anybody's guess.

Mark Harridge

Author: Mark Harridge

Mark Harridge first came across Bitcoin and began to use its peer-to-peer payment network in mid to late-2011. He quickly understood that this technology would change the world. Mark is passionate about crypto adoption, from a macro economic and institutional perspective, and the numerous factors that fuel the relentless march towards individual self sovereignty and the decentralised society of the future.

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