Bitcoin and Other Cryptocurrencies Drop after Russia Invades Ukraine

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The price of Bitcoin and other cryptocurrencies has dropped significantly since Russia invaded Ukraine, which may signal a lack of confidence in digital currencies. Since the inception of Bitcoin in 2009, the currency has risen in value by more than 10,000% and has garnered a market capitalization of over $13 billion. However, since the start of 2014, there have been massive drops in valuation and price action that may call into question whether Bitcoin is still a safe investment. This situation could be caused by multiple factors, including fear of investment or lack of faith in digital currencies.

There have also been big fluctuations in the price of gold, which could have an impact on the value of Bitcoin. Since Russia invaded neighboring Ukraine and Crimea, a region that’s currently under dispute, the price of gold has risen by over 10 percent. Because these two assets are both known as havens during times of uncertainty, it is likely that both gold and Bitcoin will fall when investment fear rises, as it did in late 2011. On February 28, the price of Bitcoin dropped below $500, while gold fell to its lowest point since December 2012. If the price of both assets drops further, it is likely that Bitcoin will suffer more in terms of value because its price is much lower than gold. Another factor that could affect the value of Bitcoin is how influential China has been on its valuation. After China’s central bank banned financial institutions from handling Bitcoin transactions in December 2013, there was a massive drop in prices as well as a reduction in trade volume by over 50%.

Correlation Conundrum: 

In 2011, there was a correlation between the price of Bitcoin and gold as the two assets dropped when investment became overly fearful. After the United States’ debt rating was downgraded in August 2011, the price of gold was down by around 5%. In December 2011, the Venezuelan government had to devalue its currency by around 95%, which also sent their economy into disarray. Later that year, it was announced that Cyprus would have to bail out its banks because they were undercapitalized, and many investors lost money. The price of Bitcoin fell by around 16%, while the price of gold fell by 15%, demonstrating that there was a correlation between both assets.

During the middle of 2012, the price of gold started to rise as a result of fears that Europe’s economy would decline while spending cuts were being implemented. As a result, there was a massive increase in demand by investors who were hoping to get higher returns by investing in gold than those produced by other assets. The price of Bitcoin also increased significantly during this period and rose by more than $200 over two weeks. During this time, many other alternative currencies saw huge increases in price as well.

A Safe Haven?

In late 2012 and early 2013, the price of Bitcoin started to rise significantly as there was a substantial amount of fear in the economic system. Greece was experiencing a financial crisis, and its national deficit was higher than expected. The price of Bitcoin rose by over 273% in the course of two months. In addition to the financial crisis in Greece, Cyprus also had its own economic problems. Although Cyprus eventually received a bailout, investors worried that there could be a bank run, and they took money out of Cypriot banks while others bought gold and Bitcoins. Bitcoin has been able to avoid many of the same problems that current fiat currencies have and has become increasingly popular as an investment vehicle. Although there are many countries that have created their own cryptocurrencies, Bitcoin is more widely used when it comes to investing. Bitcoin does not have the same problems that other currencies do, but at the same time, it also has its own issues.

Rouble Routed, Bitcoin Bounces:

In Russia, the government has attempted to ban the usage of cryptocurrencies such as Bitcoin and has even attempted to block websites that deal with them. Nevertheless, people in Russia and other countries have been able to access these sites and have continued to send transactions via Bitcoin. Recently, Russia attempted to block transactions of Bitcoin by entering their IP addresses into a blacklist. However, the ban has not made a significant impact on how frequently Bitcoin is traded in the country. Recently, the bitcoin exchange BTC-e has been under scrutiny for large sums of money being transferred to them. Authorities are claiming that BTC-e is responsible for laundering massive amounts of money in the form of Bitcoin. Earlier this year, the cryptocurrency Ripple was created by a private company and has since taken off as an alternative to Bitcoin. Although there are many similarities between Ripple and Bitcoin, it differs in several key aspects, including its distribution structure. Visit the Bitcoin Prime official site to learn more about bitcoin and bitcoin trading how you can earn and use this currency.

Conclusion:

After being introduced in 2009, Bitcoin has become more popular as an alternative currency. In the past three years, there have been some major drops in value, but that does not mean that it is any less safe than other currencies. Although many countries have attempted to ban Bitcoin, the currency has continued to rise in popularity and value. After China banned all financial institutions from handling Bitcoin transactions, there was a massive drop in the number of transactions taking place.

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