Bitcoin has fallen again. After a week or so of the world’s number one digital currency rising back above $40,000 and staying within that range, it looks like the asset has taken another tumble and at the time of writing, is trading for around $39,000 per unit.
Bitcoin Takes Another Dive
It appears the fight between Russia and Ukraine continues to bear heavy burdens on the digital asset. While some – such as Mark Mobius – have claimed that the battle in eastern Europe is potentially helping BTC stay strong price wise, it looks like this time around, the fight has caused the currency to experience another heavy dip.
While the growing threat of war is not necessarily having any bearing on bitcoin’s price, it is weighing heavily on the minds of investors and traders everywhere, who are either pulling their money out completely or who have taken a break from buying bitcoin and other digital assets out of fear that risk-based assets such as these are going to crash and burn in the coming weeks.
During times of war, financial magnates such as Berkshire Hathaway’s Warren Buffett have warned that buying bitcoin is not a smart idea, and many traders appear to be taking note. In addition, there are also several eyes on the United States and its allies during this time. Will America get physically involved in the war, or will the nation’s so-called leaders continue to simply bolster their sanctions?
Yuga Hasegawa – an analyst at crypto exchange Bit Bank – explained in a recent statement:
We should pay close attention to whether the Russian ruble can stop the fall against other major currencies amid intensifying financial sanctions on Russia, since another drop can potentially push the price of bitcoin higher like it did on Monday.
David Duong – head of institutional research at Coinbase – had some rather bearish ideas pertaining to bitcoin in a recent interview. He believes that at this stage, the world’s number one cryptocurrency isn’t likely to show any signs of recovery until the midway point of 2022. He is convinced that it’s going to be at least two to three months before bitcoin begins moving up the financial ladder again.
Will It Take a While for the Currency to Fix Itself?
Prior to the invasion, we thought a recovery could come sooner, but we think investors now need to have more clarity over the timing of peak inflation and the Fed hiking cycle before they may be willing to deploy more capital here… Sanctions on the Russian central bank have drained the global system of ~US$300 billion in reserve liquidity, which has the potential to hurt risk assets in the weeks ahead.
In recent years, bitcoin has been looked at as something of a hedge tool that can keep wealth steady, though this narrative has been challenged in recent weeks.