Company / Analytics

Analytics, 02 March 2022

Crypto stabilises amid geopolitical uncertainty

Cryptocurrency prices are soaring despite geopolitical tensions surrounding the Russia-Ukraine conflict, with bitcoin leading the gains.

Bitcoin price is back above $40,000, following a drop below $35,000 after Russia invaded Ukraine last week. The conflict in eastern Europe presents new and significant volatility to the crypto and stock markets.

The crypto market has been increasingly tracking the stock market lately, which, combined with more mainstream adoption and the slumping prices we’ve seen to start the year, makes it even more intertwined with developing circumstances in the conflict.

The global cryptocurrency market cap hit $1.9 trillion mark on Tuesday after rising about 12 per cent. Total cryptocurrency trading volume jumped 34 per cent to $109.19 billion.

Bitcoin price surges amid the conflict

Bitcoin is back over $40,000, following a drop below $35,000 after Russia’s invasion of Ukraine last week. BTC was trading around $41,200 at press time and is up 5% over the past 24 hours.

The two-week long downtrend registered a downside exhaustion signal on Feb. 24, which typically precedes brief price rallies. Still, long-term momentum indicators are negative, pointing to limited upside around the $43,000-$46,000 resistance zone.

The volatility highlights a durable truth for Bitcoin: it is still a highly volatile and speculative investment. In fact, the last time the original cryptocurrency set a record high in mid-April, it abruptly lost over half of its value and plunged to around $30,000 by mid-July. Similarly, Bitcoin dropped back below $35,000 this month not long after its most recent November high Though Bitcoin and Ethereum have both had ups and downs short of their all-time highs since then, many experts still expect Bitcoin’s price to exceed $100,000 at some point.

What Investors should know about surging crypto prices

If you’re investing in cryptocurrency, expect volatility to continue. That’s why experts recommend keeping your crypto investments to less than 5% of your total portfolio.

Cryptocurrency is a volatile investment. In some days they can go down 80%. But if you believe in the long-term potential of Bitcoin, just don’t check on it. That’s the best thing you can do.

Just like you shouldn’t let a price drop influence your decision to buy crypto, don’t let a sudden price increase alter your long-term investment strategy. Even more importantly, don’t start buying more crypto just because the price is rising. Always make sure your financial bases are covered — from your retirement accounts to emergency savings — before putting any extra cash into a speculative asset like Bitcoin.

Bitcoin’s latest big jump also isn’t anything new. While in the long-term Bitcoin’s price has generally gone up, it experiences volatility along the way. Investors should continue to hold and not worry about the fluctuations.

Bottomline: Whether crypto is going up or down, the best thing you can do is to not look at it. Set it and forget it like you would any traditional long-term investment account. Investors should not let their emotions get too much into the current surge surrounding bitcoin because they could buy or sell at the wrong time.

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