(Bloomberg) — Bitcoin extended losses as the war between Russia and Ukraine intensified, weighing on investor sentiment across asset classes.
The largest cryptocurrency by market value declined for a second day, dropping as much as 6.7% to $39,259 in New York, setting it on a path to end the week on a down note after rallying 17% from Monday through Wednesday. Ether, the No. 2 token, fell more than 7%. Leading altcoins lower, Polkadot and Solana were both down more than 6% over the last 24 hours, according to data from CoinMarketCap.
“The conflict in Ukraine continues to escalate, putting the world on edge,” Lindsey Bell, chief markets and money strategist at Ally, said in a note. “Markets have been plagued by uncertainty, creating a very challenging investing environment.”
Europe’s largest atomic power plant located in southeastern Ukraine was attacked by Russia in a move some denounced as “nuclear terrorism.” There were no causalities and the fire has been extinguished.
The start of the week was characterized by large gains, with cryptocurrencies outperforming stocks. The imposition of sanctions drove speculation that Russians and Ukrainians would turn to digital assets as a means to move money. Volumes have since slowed.
It poured fuel on the fire of assertions by advocates who long touted Bitcoin as a store of value, detached from broader moves in the financial markets. A 50-day correlation with Bitcoin and the S&P 500 currently stands at 0.5. A coefficient of 1 represents locksteps moves, while zero denotes completely unrelated behavior.
“There is a group of investors that do see this as a risk-on asset, just like they would see stocks or anything else,” said Brett Munster, a portfolio manager at hedge fund Blockforce Capital. “In the long run, I think the store of value narrative wins out.”
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