Is Russia’s war with Ukraine knocking down the price of bitcoin?

Key facts:
  • Bitcoin has fallen back to the floor of 35 thousand dollars per unit.

  • Gold, silver and fuels have gained price this Thursday.

It is a fact: the conflict between Russia and Ukraine escalated, with Russian troops beginning a military operation on Ukrainian territory during the early hours of this Thursday, February 24. The response of the markets has been forceful, and in the particular case of bitcoin (BTC) we are talking about a drop of around 10% in the last 24 hours, once again flirting with the support of 34/35 thousand dollars per coin.

During the trading session on Wednesday, the main cryptocurrency tried to return to 40 thousand dollars, but ran into a ceiling over 39 thousand. Then came the crash, which took BTC’s valuation on exchanges to just over $34,300 at its lowest point on Thursday. Now, at the time of writing this article, he is struggling to hold on to 35,000.

Already in the days before, the dominant narrative in the markets was fear. The potential escalation of aggressions in the European region made headlines and the markets, both cryptocurrencies and the stock market, reacted downwards accordingly. Already BTC had been oscillating and showing signs of receding in recent days. And the recovery she was trying to come to has stopped dead in recent hours.


Meanwhile, the fear and greed index (which serves as a gauge for bitcoin market sentiment), reflects a “extreme fear” The feeling of instability has persisted so far this year, but the current state has changed compared to last week, when the index was “neutral”. The price movements of the last hours seem to support that sentiment.

Extreme fear is the bitcoin market sentiment right now. Source:

The larger the war scale, the worse the scenario in the markets

In the last 24 hours, more than 200 billion dollars in capitalization of the entire cryptocurrency market have fallen, along with the price of bitcoin. In addition to BTC, other major coins have lost between 9% and 18% in that period. Cardano, Avalanche, Dogecoin and Shiba Inu among the most affectedon data from CoinMarketCap.

Outside of cryptocurrencies, the picture is not very different. The percentages are lower, in the midst of markets with lower volatilities. But the predominant color is also red for stock markets and stock indices. The S&P 500, Dow Jones, Nasdaq; all opened lower, as shown by the Records.

In this scenario of financial debacle, raw materials are mainly saved. Especially the fuels They have opened with very positive numbers the market this Thursday, in which precious metals like gold and silver also win.

Raw materials, fuel, gold and silver, on the rise this Thursday, February 24. Source:

It would seem, then, that the markets are betting on essential materials in a war scenario, while the safeguard of value is beginning to migrate towards more traditional instruments. Point for physical gold, while digital (BTC) is seriously affected, as we reported in CriptoNoticias this Thursday morning.

The analyst Eduardo Gavotti considers precisely that, although “geopolitics is always a factor that influences the volatility of the markets”, there are others that are more related to events of this type. In particular, the energy industry, some raw materials and agricultural inputs. The countries involved on this occasion, Russia and Ukraine, are also the main energy and agricultural producers, respectively.

The larger the war scale, the worse the scenario in the markets

Gavotti was of the idea that the escalation of the war would not have such an impact on global markets, not be a large-scale event that could become a major factor. “But after what happened recently it is clear that it has had a negative effect on the markets,” he reflected in exclusive contact with CriptoNoticias.

A war in which the great world powers take part would have global implications and would affect the prices of all risk assets, without a doubt. Bitcoin would not be an exception.

Eduardo Gavotti, market analyst

As examples of these local conflicts, Gavotti cited the cases of Syria or the conflict between Israel and Palestine. Both cases have not had a major impact on the bitcoin market. The situation seems to be different this time: “now that we know that we are not facing the 2014 scenario when the annexation of Crimea, there is a direct impact on all markets, including bitcoin.”

Does the fall of bitcoin have other factors behind it?

For Gavotti, however, what is affecting bitcoin today is not primarily geopolitical but “the situation of the financial markets as a consequence of the signaling of the change in monetary policy”.

This behavior has generated, continues the specialist, two things: “the adjustment of the valuations of financial assets due to the effect of the rise in interest rates and the reduction in liquidity that will mean the withdrawal of monetary stimuli and the normalization of the balance of the Federal Reserve”.

Meanwhile, BTC has been coupled to the behavior of risky assets, as investors maintain a speculative approach. “Despite its properties by design, so Bitcoin would accompany the stock markets in the face of a continuation of the fall of these markets,” he adds, and closes with a lapidary appreciation: “the geopolitical factor increases that effect of the liquidity situation global”. That is to say, that something that was already bad, looks even worse.

For his part, the economist José Miguel Farías reflected on the issue via Twitter. In a thread posted last Tuesday, February 22, assured that predicting the behavior of the markets is very difficult and that «the job of the investor should not be to make predictions of hundreds of possible scenarios about things that he does not control».

Global events, is a prolonged bear market in bitcoin coming?

Since the beginning of the pandemic, bitcoin had not faced an adverse global scenario like the one now. On that occasion, there was a 40% drop in just one day, in March 2020. By that time, BTC went from more than 8,000 to just above 4,000 dollars. It even fell to 3 thousand, coinciding with the official declaration of the pandemic.

For Eduardo Gavotti, the debacle that occurred on that occasion (both in bitcoin and in the rest of the markets) is “perhaps unprecedented, unique in history.” In this regard, he said that never before had the markets fallen in such a way in such a short time.

Now, two years later, with the bitcoin market at another level after a bull run that has multiplied by more than 10 the prices of March 2020, the landscape would be different. Although he does believe that it is time for a bear market, it would not be recoverable so soon.

I believe that this time we will have a bear market of similar depth but of longer duration, unless there is a significant change in monetary policy that relaxes liquidity conditions in the markets again.

Eduardo Gavotti, market analyst.