As global markets were roiled by geopolitical concerns over Russian and Ukrainian, digital currencies plummeted on Tuesday.
At the time of writing, Bitcoin (BTC) was trading at $38,011.54, down around 0.5%. In early morning activity, the cryptocurrency dropped to $36,370, its lowest level in almost two weeks.
Russian- Ukraine Tussle
The dip was attributable to rising tensions between Russia and Ukraine, according to analysts. Russian President Vladimir Putin dispatched soldiers to two separatist regions in eastern Ukraine on Monday. It was just hours after they declared independence.
Fears of a full-fledged invasion have grown as a result of the move. It pushes global stocks substantially lower than traders’ appetite for risk has waned.
“Bitcoin’s safe space narrative has almost totally disintegrated as the likelihood of military confrontation rises and the US-Russia relationship deteriorates,” said Yuya Hasegawa, crypto market analyst at Japanese bitcoin exchange Bitbank.
Bitcoin proponents frequently compare it to gold as a safe-haven asset, implying that it may store wealth in uncertain times.
The case for bitcoin as a kind of “digital gold” has weakened as more institutional investors have begun to trade it, and the cryptocurrency is becoming more closely correlated with changes in traditional markets such as shares.
This week, Hasegawa predicts bitcoin will trade between $32,000 and $43,000. $39,500 is “first-level support coming into this week,” according to DailyFX’s John Kicklighter, but $32,500 “seems more like the point of no return.”
Bitcoin is already trading significantly below its all-time highs of $68,000, which it achieved in November 2021. Some investors feel this is the best the cryptocurrency will get for a while.
The next bitcoin bull market, according to Du Jun, co-founder of cryptocurrency exchange Huobi, is unlikely to occur until 2024 at the earliest, when the next so-called “halving” event is scheduled.
“We won’t be able to welcome the next bull market on bitcoin until the end of 2024 to the beginning of 2025,” Du predicted.
The halving of bitcoin compensates miners for validating transactions, effectively restricting the number of new coins in circulation.
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