Ukraine Crisis Might Impact Global Markets and Bitcoin

 Important Factors & Impact

• The decline we've witnessed in recent weeks is mostly due to factors other than Russia-Ukraine tensions.
• European markets have fallen to their lowest levels since October, while New York has experienced a wild trading session.
• In any case, whereas possibly significant, most impacts can be generally short-term in their scope.

 

We are in the midst of a crisis. While we type these words, Russian troops are training along Ukraine's border, while the United States has put 8,500 troops on alert, just in case an eastern European war breaks out.

As tension has increased between Russia and Ukraine over the latter's possible NATO membership, talks are being held between representatives of both nations, however the situation is still unclear However uncertain the world has become in recent decades, it remains uncertain for financial markets, including crypto.

According to a variety of analysts who spoke with Cryptonews.com, the impact of the Ukraine-Russia crisis -- and its potential worsening -- on the cryptoasset market may not be as significant as you might expect. This is largely due to other macroeconomic factors, such as the housing market Currently, these factors are weighing down the market.

 

Fears of a military clash in Ukraine have sent global financial markets tumbling, wiping £53 billion off the value of the UK's blue-chip share index.

After Nato stated it was fortifying its eastern frontiers with land, sea, and air forces as a Russian invasion of Ukraine became increasingly likely, European markets fell 3.8 percent to their lowest levels since October, their largest one-day drop in more than 18 months.

Investors feared that the Federal Reserve, the US central bank, would hike interest rates many times this year, beginning in March, after US inflation hit a 40-year high of 7% in December.

The FTSE 100 index dropped 2.6 percent to a one-month low in the City of London, its worst drop in two months, as Boris Johnson cautioned that a "lightning war" in Ukraine was possible but not inevitable. The blue-chip index dropped 197 points to 7,297 points.

Pearson, the educational publisher, led the FTSE 100 decliners, falling 9%, while Russian steelmaker Evraz fell 8%. Miners, energy producers, travel companies, and homebuilders all suffered losses.

The Dax index of major German companies fell 3.8 percent in Frankfurt, while France's Cac fell 4%.

The UK's FTSE 100 share index has fallen to a one-month low, hit by worries over US interest rate rises and rising Ukraine tensions

After heavy selling pushed the S&P 500 index down over 3% at one point, the indices ended the day higher after a late rally pushed the major US indices higher.

Investors flocked to safe-haven assets such as the US dollar and the Swiss franc, which hit a six-year high against the euro.

The sell-off in risk assets impacted cryptocurrencies, with bitcoin falling to a six-month low of around $33,000 (£24,500), less than half its all-time high of $69,000 reached last November.

The Fed, which meets this week, may also begin to reduce its balance sheet this year, removing some of the stimulus implemented since the Covid pandemic began.

"Traders are continuing to sell as concerns about the Russia-Ukraine situation grow," said David Madden, a market analyst at Equiti Capital. "Concerns that the Federal Reserve will issue a hawkish update on Wednesday are also factoring in."

The prospect of tighter monetary policy has dragged down technology stocks, with the Nasdaq Composite index entering correction territory earlier this month.

"The double whammy of risk events is proving too much for Wall Street to handle, with the Nasdaq once again leading the charge lower as the tech rout deepens," Fiona Cincotta, senior financial markets analyst at City Index, said.

"Meanwhile, embassy personnel are being evacuated from Kyiv amid growing fears that Russia will send troops into Ukraine soon." Last week's talks between the US and Russia failed to pave the way for a resolution. Fears of war are driving the risk-off trade, which is causing bonds to rise."

As a result, Moscow's stock market saw heavy selling. The Moex index of Russian companies fell almost 6% to its lowest level since December 2020, taking its losses so far in 2022 to almost 15%.

The rouble plunged 2.5% to over 79 roubles per dollar, as the Bank of Russia halted purchases of foreign currencies amid heightened tensions over Ukraine.Purchasing managers' surveys show that private sector growth in the UK, eurozone, and U.S. hit its slowest pace in 18 months in January, Additionally, there were signs that the Omicron variant had slowed the global recovery.