Bitcoin is 'paying the price' for Wall Street's 'de-risking' plight
NEW YORK ( Feb 18) Bitcoin is down 7% on the day as the cryptocurrency market is paying the price for the accelerating "de-risking" mode on Wall Street, according to analysts.
Investors continue to flee risk assets as the Russia-Ukraine conflict's uncertainty weighs on market sentiment. And the crypto market is caught up in the selloff.
The world's largest cryptocurrency tumbled along with risky stocks on Thursday, with Bitcoin last trading at $41,037, down 7.2% on the day. Ethereum was down 8% on the day and trading at $2,905.
"Wall Street has gone full de-risking mode, and Bitcoin is paying the price," said OANDA senior market analyst Edward Moya. "Fears over geopolitical concerns and potentially aggressive central bank tightening has cryptos across the board in freefall."
Tensions escalated as the U.S. said that war in Ukraine was "imminent" after shelling was reported on Ukraine's front line. "The evidence on the ground is that Russia is moving toward an imminent invasion. This is a crucial moment," said U.S. Ambassador to the United Nations, Linda Thomas-Greenfield.
U.S. President Joe Biden confirmed that there is every indication that Russia is planning to invade Ukraine, citing Moscow carrying out a false flag operation to justify military action. "We have reason to believe they are engaged in a false flag operation to have an excuse to go in. Every indication we have is they're prepared to go into Ukraine and attack Ukraine," Biden told reporters on Thursday.
Russia has been denying that it plans to attack Ukraine and stated earlier this week that it was pulling back some troops from the border. However, Washington noted there was no evidence of the withdrawal.
Traders view Bitcoin as the "ultimate risky asset," and any further escalation in Ukraine would keep the downward pressure on prices, noted Moya. "A Ukraine invasion would keep crypto selling pressure going another 10-15% over the short-term," he added.
This keeps Bitcoin's trading pattern connected to high-risk stocks, which saw another significant drop on Thursday, said Pepperstone's head of research Chris Weston.
"Crypto has shown us once again that it is a high beta risk asset, and it has a dark sinister look that could morph into something ugly. Recall, these instruments can be traded long or short as a CFD," Weston pointed out.
The Dow Jones closed the day down 1.8%, the S&P 500 fell 2.1% and the Nasdaq declined 2.9% on the day.
KITCO
