Putin’s invasion of Ukraine had an immediate negative impact on the crypto stock market. But cryptocurrency investors also suffered losses as Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) all fell in tandem with the stock market on Thursday.
Skittish investors have historically turned to stable assets like gold in times of uncertainty and war. But crypto advocates say that cryptocurrency’s ability to separate itself from financial markets makes it a great investment when other markets are volatile. Some even call Bitcoin or digital gold, which is a type of cryptocurrency, gold.
In spite of the fact that a large number of individuals are purchasing gold at the moment, the stock market is declining at an even faster rate than before.
The value of cryptocurrency as a whole fell by almost 8% on Thursday. It depletes more than $150 billion in less than 24 hours. Several currencies, including the Solana (SOL) and the Shiba Inu (SHIB), plummeted by as much as 10%. But there were some that soared in value.
Digital and Real-world Crypto Assets
Cryptocurrency exchange CEO and founder Sam Bankman-Fried said that automated trading of cryptocurrency is a big reason why the price has gone down. Algorithmic crypto trading is based on a set of instructions for programs to follow when they trade cryptocurrencies. Take a look at how the stock market is moving to see how these programs work. And right now, everyone is selling because of the Ukraine crisis, and all stock markets are going down. This means that crypto is going down at the same rate as traditional financial assets.
Bitcoin and traditional stocks have been moving in the same direction for a long time now. It is good for people who want to make money. The stock market had a bad start to 2022, and so did Bitcoin. Federal Reserve policies, like raising interest rates, have encouraged people to sell both digital and real-world assets. These led to both Bitcoin and the stock market having bad starts.
As more and more large banks begin to offer digital asset loans, cryptocurrency’s success is becoming increasingly tied to the performance of key indexes and other more mainstream financial assets, according to the Financial Times.
The co-head of foreign exchange strategy at Goldman Sachs told the Financial Times in January that Bitcoin and other digital assets had low correlations to traditional financial market variables before the pandemic. In other words, crypto was an entirely different ecosystem. When people started to use Bitcoin more and more, it started to have a lot more of an effect on the prices of other things, like stocks and bonds.
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