Bitcoin dropped as much as 8 per cent in price on Thursday morning, and traditional markets were also not spared the disarray.
This might be seen as a good sign, since the predictions of many analysts were that cryptocurrency could see a price hike due to global disruption since it is seen as an alternative to government-backed currency and assets.
But instead, Bitcoin and other digital assets have sagged as there is open conflict between Russia and Ukraine. The latest downturn translates into the value of the cryptocurrency market dropping to $1.75 trillion, the data from CoinmarketCap suggests.
Many of the other crypto assets saw even more losses than Bitcoin, averaging around 18-20 per cent. Ethereum, the second most traded cryptocurrency, was down almost 11 per cent on Thursday morning, and many other large coins also dropped more than 10 per cent.
Due to those rapid drops, crypto trading volumes shot up significantly. Trading activity was up by 45 per cent on Thursday, CoinMarketCap reported.
Global Financial Markets
The weak performance was also seen across other financial markets, including shares and commodity prices.
Conventional benchmarks in Europe and Asia were down by as much as 4 percent as traders tried to figure out how big Putin’s incursion would be and how big would be the Western retaliation. Wall Street futures fell by an unexpectedly large daily margin of 2.5 percent.
In Brussels, the president of the European Union (EU) said Thursday that the 27-nation EU planned a tremendous response to Russia’s attack on sanctions and held President Puting accountable for the devastation.
Putin said Russia’s actions were meant to protect civilians in eastern Ukraine, a claim the West says is to justify an invasion.
Cryptos Face Another Challenge
What is very interesting is that the reputation of crypto assets as an alternate economy, and a shadowy one at that, is gradually being challenged by the more predicted and limited response of the crypto markets to world events.
As crypto assets and crypto trading become more mainstream and both the public and financial institutions feel more comfortable with investing and trading them, it is encouraging to see both their reaction to world events and their volatility becoming more in traditional assets.
Top five gainers for the week
- Terra (LUNA) : 52% up
- Anchor Protocol (ANC): 51% up
- Waves (WAVES): 27% up
- Cosmos (ATOM): 11% up
- Helium (HNT): 5% up
- Top Losers This Week –
- Convex Finance (CVX): 24% down
- Neo (NEO): 20% down
- Kusama (KSM): 17% down
- PancakeSwap (CAKE): 16% down
- The Graph (GRT): 15% down
(Note: Data as of 12.15 pm IST, February 27, 2022; Source: Coinmarketcap.com. Only the top 100 cryptos in terms of market capitalization are taken into account.)
(The author is Pratik Gauri, CEO and Founder, 5ire. The views are his own)
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