Bitcoin dropped to $36,370 Tuesday. Other popular digital coins like ethereum and pipple have also fallen recently.
Analysts stated that the market declines indicate that cryptocurrencies are not a good investment choice for those seeking stability during periods of market turmoil. This contrasts with traditional hedges against risks like gold or U.S. Treasury securities.
"Bitcoin’s safe haven narrative is almost entirely gone as the rising possibility for military conflict and worsening U.S.–Russia relationship puts the wider market in risk-aversion mode," Yuya Hashigawa, a Japanese crypto market analyst at Bitbank, stated in a research paper.
Wall Street saw stocks fall Tuesday, as investors fled the turmoil caused by conflict in Ukraine. On Tuesday, the price of gold reached $1907 an troy ounce, which is its highest point for the year. Investors are also flocking to U.S. government bonds. This drives up Treasury prices and lowers their yields which both move in opposite directions.
Edward Moya, Oanda's senior market analyst, stated that bitcoin is the most risky asset and that a Ukraine invasion would increase crypto selling pressure by 10 percent to 15% in the short-term.
On Tuesday afternoon, President Biden announced new sanctions on Russia in response to Russia's decision to send troops into Ukraine's eastern separatist regions. Biden stated that the sanctions will be closely coordinated with allies, partners and other countries and will target Russia's two largest banks and its sovereign debt.