Mounting regulatory concerns and the Russia-Ukraine war have tanked Bitcoin’s price once again. It managed to hold the $40K ground for a while before succumbing to the pressure over the weekend and dropping further below. It tanked down to $36 before regaining the $38K-$39K level and pushing toward $40,000. Things are currently looking solid as Bitcoin’s trading over $41,000 at the moment.
However, the fear of further price drops remains, with many believing that the current European war will allow bears to emerge.
In the wake of the Russian invasion of Ukraine, oil prices have surged to record levels. It has stirred up quite a bit of trouble in the financial sector and has affected crypto prices as well. Stocks are falling rapidly due to mountain inflation pressure, instilling fear in investors who are afraid to buy right now.
Bear Market Once Again?
When the year started, everyone was quite excited about crypto prices going up. After Bitcoin hit it record price in November 2021, prices have been going down. Still, it was no bear market at all, so there was plenty of optimism of regained price levels. That optimism has diminished in the past few weeks as the Russia-Ukraine war ravaged the oil and financial market in Europe.
Oil prices have been shooting up early on Monday. The price of brent crude went up to $139, which is the highest price point in the past 14 years. Its highest price was in 2009 when it went for $147, not far from yesterday’s level.
On the stock market, Asia Dow and Stoxx 600 dropped over 3%. The US S&P 500 futures were trading nearly 1.5% lower, while the Rupee lost 1.1% of its price. The German DAX index lost over 4% on Monday, so it’s clear that the war is affecting Europe more than the expected. To make matters worse, if it continues, things will definitely go further south, and cryptocurrencies won’t be excluded.
The fear in traditional markets has affected cryptos too. It’s not just stocks – gas prices have gone up to $3,700 per 1,000 cubic meters, raising fear of high inflation. Things have already been bad before, but they might get worse from this point on.
A Silver Lining?
According to some analysts, there might be a silver lining to Bitcoin’s slump. Some believe that Bitcoin’s potential break above the 200-day moving average (which would be a first since January) is a bullish signal that could take the price up. While Bitcoin is trading well below its long-term threshold, once it breaks above it, it’ll take only a short time for prices to soar.
Still, that depends on a lot of factors. The Russia-Ukraine war showed once again that cryptos move in tandem with other risk assets. These include equities. As those markets drop, cryptos suffer the same fate.
The good news is that Bitcoin has been tested numerous times before and it performed admirably. While this time the situation is far more serious, it only takes a bullish run to get the price back up and to new heights, which might be happening as soon as things in Europe turn back to normal.