Cryptocurrency prices are down upto 10 per cent as Russian President Vladimir Putin announced a 'military operation' in Ukraine. As geopolitical uncertainties grew, the crypto market capitalisation dipped into the reds wiping out 8 per cent of the market cap at $1.59 trillion. Bitcoin, the oldest and the largest cryptocurrency, is currently down by 8 per cent and is trading at Rs 27,59,004 ($34,989). Ethereum, the second-largest crypto, is down by 10 per cent at Rs 1,88,512 ($2391.63). Meme Coins such as Shiba Inu and Dogecoin are also down upto 12 per cent at Rs 0.001788 ($0.00002254) and Rs 9.07 ($0.114).
Sensex also fell 1,640 points to 55,585 and Nifty dropped 490 points to 16,572 in the morning session. Though crypto is seen as a hedge against global uncertainties, the current downfall indicates the reversal of the trend.
Vikram Subburaj, CEO of Giottus Crypto Exchange said, “The panic sell witnessed in the markets today is an expected reaction to any global crisis. The key thing to note is that the fundamentals of the crypto asset class haven’t changed. While there is a possibility of further declines, the asset class is expected to absorb large volume buys beyond another 20 per cent drop. Taking history into perspective, when the COVID-19 pandemic hit, we witnessed one of the biggest crashes in stocks and crypto. However, both assets recovered to new all-time highs in the next 18 months. Thus, we believe, the current crisis also presents an opportunity to invest in these assets at a lower price.”
He further argued that investors with long term conviction will likely sweep the markets soon and buy crypto assets with solid fundamentals.
“Within crypto, we encourage investing in assets that have solid fundamentals such as Bitcoin and Ethereum while avoiding high risk ones such as meme coin,” he said further.
CoinDCX Research Team states that while crypto has historically moved inversely to traditional markets—in the case of the start of the COVID pandemic that triggered Bitcoin’s 2020 rally—this developing trend could be an indication of the maturation of the crypto sector and its growing position in mainstream finance. With no end in sight for the ongoing geopolitical conflict, the traditional market and the digital asset sector may face extended uncertainties in the road ahead.
Dow Jones Industrial Average also dipped to its lowest since the start of the year as the world braces itself for a full-scale invasion of Ukraine.
On Wednesday Bitcoin rose over 3 per cent as Asian stocks rebounded on receding fears of an immediate outbreak of war after US slapped sanctions on Russia. The price of Bitcoin gained 3.69 per cent to $38,015 on Coinmarketcap. The market cap of the cryptocurrency rose to $721.940 billion. The global crypto market cap stood at $1.72 trillion after a rise of 4.58 per cent.
Given the volatile nature of cryptos, the Reserve Bank of India has time and again warned investors. Michael Patra, Deputy Governor of RBI, speaking at an event organised by Pune International said, ''RBI's view is quite known on crypto. I think it is one of the views that has actually delayed a bill on that subject but we will engage in a fair debate on that subject and will look at all sides of the debate,'' The central bank is in favour of a complete ban on the speculative assets, saying they hold no underlying value at all, and has also called them a threat to financial stability.