Bitcoin price: Cryptocurrency plunges as Russia-Ukraine conflict escalates, fears of bear market

Experts think the Russo-Ukraine war has brought bitcoin to its knees earlier than expected, with a bear market already in place.

Experts have cast doubt on cryptocurrency’s ability to weather global storms in the wake of the Ukraine-Russia conflict.

Ever since tensions between the two nations brewed into full-on war last week, cryptocurrency has been on a roller coaster in terms of its prices.

Last Thursday, the top-ranked cryptocurrency, bitcoin, briefly dipped below US$35,000. It is now trading slightly higher, at US$37,000.

Other major coins including ethereum, solana and ripple XRP have also taken a huge hit in recent days.

The combined bitcoin and crypto market capitalisation has almost halved in value since its November peak. In the past few days, US$500 billion (A$700b) has been wiped from the market.

Forbes warned on Sunday: “Bitcoin’s extreme price volatility at a time when the gold price has climbed has undermined the popular narrative that bitcoin has begun acting as digital gold, a so-called safe-haven asset that investors flee to in times of perceived risk”.

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The publication wasn’t the only one with concerns about bitcoin’s safe haven capabilities.

“If the situation in Ukraine escalates even more bitcoin may fall below $30,000 as investors leave for defensive assets,” said Alex Kuptsikevich, financial analyst at FxPro, in a note.

Experts are worried of a mass sell-off in the wake of the panic from investors.

“Regardless of asset class, there’s a tremendous amount of volatility that comes with war,” said Doug Boneparth, a financial planner and founder of Bone Fide Wealth.

“It’s going to make it that much more difficult for investors to stick to their strategies.”

Another prominent financial analyst warned that this increased volatility could sound cryptocurrency’s death knell and that the market could be stuck until 2024.

Du Jun, the co-CEO of cryptocurrency exchange Huobi, told CNBC: “If this circle continues, we are now at the early stage of a bear market.”

“Following this cycle, it won’t be until end of 2024 to beginning of 2025 that we can welcome the next bull market on bitcoin.”

The Russian economy has also taken a battering through war costs and hefty sanctions placed on the nation by its western counterparts.

There are reports that the war effort is costing Russia a whopping US$19 billion (A$27 billion) a day.

Russia was also booted out of SWIFT, a network used internationally for payments, in what one expert has cited as a “catastrophe” for the coming week.

“It means there is going to be a catastrophe on the Russian currency market on Monday,” Sergei Aleksashenko told Reuters.

“I think they will stop trading and then the exchange rate will be fixed at an artificial level just like in Soviet times.”

Cryptocurrency is actually aiding Ukraine’s war effort.

On Sunday, the official Twitter account of the Ukraine government pleaded for donations through cryptocurrency.

“Stand with the people of Ukraine. Now accepting cryptocurrency donations. Bitcoin, ethereum and USDT”, they tweeted, alongside the details for two cryptocurrency wallets.

In just over the following 24 hours, more than US$10 million (A$13 million) has so been received in the two accounts.

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