Why is bitcoin experiencing such a dip as of late? The tensions between Russia, Ukraine, and the United States may have something to do with it.

Russia and Ukraine Are Having Adverse Effects on BTC

Over the last few weeks, we have continuously seen news reports saying that Russia is potentially on the verge of invading and attacking Ukraine. If this were to happen, the United States has mentioned that it would impose sanctions on Russia and find necessary ways to retaliate. Given the risky nature of the situation – and the risky persona of bitcoin – the asset is experiencing some heavy price dips, with the world’s number one digital currency recently falling from about $45,000 to just over $40K in a matter of days.

Edward Moya – senior market analyst at Oanda – explained in an interview:

Bitcoin is the ultimate risky asset, and a Ukraine invasion would keep crypto selling pressure going another ten to 15 percent over the short term.

Reports from both NATO and U.S. officials say ground troops from Russia near the Ukrainian border have increased heavily in recent days, and thus there is a good chance an attack is coming soon. By contrast, reports from Moscow have stated that some of these troops are beginning to pull back. The big question is, “Who’s telling the truth?”

Right now, the global political spectrum (what else is new?) is trapped in a state of limbo and uncertainty. This leaves a lot of room for bitcoin to meander, and with no idea of where to go, bitcoin is seemingly taking steps backwards, but it’s not just BTC that’s suffering. Several altcoins – such as Ethereum and Solana – have followed in bitcoin’s footsteps and experienced falls that ultimately saw more than $200 billion wiped from the market over the course of 24 hours.

Danni Hewson – a financial analyst with AJ Bell – explained in a statement:

There’s a storm blowing in, and markets have been battening down the hatches. Volatility is unlikely to vanish anytime soon.

Moya continued his statement by saying that while the crypto space is looking bullish in the long term, the heat between Ukraine and Russia and questionable actions from the Fed could likely make things relatively shaky over the next month for investors. He commented:

The outlook for bitcoin remains mostly bullish, but if long-term growth prospects start taking a bigger hit from aggressive Fed tightening, institutional investors might scale down their bets.

We’ve Gone from Greedy to Fearful

Sam Kopelman – the UK manager of crypto exchange Luno – mentioned:

Despite briefly visiting the greed territory for the first time in four months last Wednesday, market sentiment has since slipped back into the fear territory as geopolitical uncertainty affects risk sentiment in the broader financial markets. Meanwhile, with inflation levels at their highest rates in [40] years, it is likely that macro uncertainty will also affect risk sentiment in the coming weeks.

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