Bitcoin dropped down to its lowest this month on Thursday, after Russian forces its troops and fired missiles at several cities in Ukraine and landed troops to attack its coast, sparking a sell-off of riskier assets.
Bitcoin enthusiasts have a long and direct persistent approach to the cryptocurrency’s value as a safe haven way to protect against inflation, financial loss or adverse circumstances, and other risks in traditional markets.
But on Thursday hours after, Russian President Vladimir Putin ordered his troops to invade Ukraine, which results in cryptocurrencies plummeting.
Russia’s President Vladimir Putin authorized that he called a special military operation to be done in the east.
The United States and its allies will impose “severe sanctions” on Russia after the attacks happened, as US President Joe Biden meanwhile said.
Global stocks and US bond yields dived deep down, while the dollar, gold and oil prices rocketed higher as investors scrambled for perceived safe-haven assets. European stocks alone plunged 3%.
Cryptocurrencies extended declines as Russia’s attacks on targets across Ukraine sent risk assets reeling, with Bitcoin slumping to a one-month low.
The largest token fell as much as 8.5% to $34,337 after Vladimir Putin’s push to demilitarize Ukraine started with a barrage of missile attacks on Thursday.
While Bitcoin pared its loss, it’s still down almost 50% from its all-time high set in November. Second-ranked Ether declined as much as 12% to $2,301.84.
Bitcoin’s swings really down during the past weeks of escalating geopolitical tensions have undermined the argument that cryptocurrencies offer a hedge in times of trouble.
That’s in large part a result of its deepening integration into global financial markets, which causes it to move more like other risk assets, according to Ben Casein, head of research and strategy at crypto exchange AAX.
Bitcoin: Market Drops
According to market tracker CoinMarketCap, the total crypto market lost $160 billion of value in the past 24 hours, plunging 10% since the Ukraine invasion began.
Of course, crypto isn’t the only asset that has tanked on the news of Russia’s invasion, or even in the buildup to the event.
Europe’s benchmark Stoxx 600 index dropped 2% after opening Thursday, while analysts expect the S&P 500 index will trim 7% in weeks to come.
But the fact that crypto is falling in lockstep with other assets is counter to Bitcoin’s identity as a safe haven.
“The correlation between crypto and stocks has been high over the last few months on both inflation-related macro news and the Russia-Ukraine geopolitical situation,” Chris Dick, a quantitative trader at crypto market maker B2C2, told CNBC.
“This correlation shows that Bitcoin is firmly behaving like a risk asset at the moment—not the safe haven it was touted to be a few years ago.”
But perhaps the most damning indictment of Bitcoin’s value as “digital gold” is that while most asset prices have plunged on news of war, real gold actually went up, hitting a 13-month high Thursday, approaching $2,000 an ounce.