Bitcoin price crashes as Russia declares war on Ukraine

(EPA)

The price of bitcoin has plunged as Russia declares war on Ukraine.

The value of the cryptocurrency dropped around 7.5 per cent on Thursday morning, as traditional markets were also thrown into disarray.

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Some analysts have long suggested that cryptocurrency could see its price sent up by global disruption, given its status as an alternative to government-backed currency and assets.

But bitcoin and other digital currencies have traded down in recent days, as tensions between Russia and Ukraine have increased.

The latest falls mean that the value of the cryptocurrency market as a whole has fallen 9 per cent over the last day, according to tracking website CoinMarketCap.

Many of those other cryptocurrencies saw even more dramatic falls than bitcoin. Ethereum was down almost 11 per cent on Thursday morning, and many large coins dropped more than 10 per cent.

Amid those rapid drops, trading volumes increased significantly. Activity was up 45 per cent on Thursday, according to CoinMarketCap.

The weak performance was matched across other financial markets, including shares and oil prices.

Market benchmarks in Europe and Asia fell by as much as 4 per cent as traders tried to figure out how large Putin’s incursion would be and the scale of Western retaliation. Wall Street futures retreated by an unusually wide daily margin of 2.5 per cent.

Brent crude oil briefly jumped above $100 per barrel in London for the first time since 2014 on unease about possible disruption of supplies from Russia, the number three producer. Benchmark U.S. crude briefly surpassed $98 per barrel. Prices of wheat and corn also jumped.

The ruble sank 7.5 per cent against the dollar.

Financial markets are in a “flight to safety and may have to price in slower growth” due to high energy costs, Chris Turner and Francesco Pesole of ING said in a report.

In Brussels, the president of the European Commission said Thursday the 27-nation European Union planned “massive and targeted sanctions” on Russia.

“We will hold President Putin accountable,” Ursula von der Leyen said.

In early trading, the FTSE 100 in London fell 2.5 per cent to 7,311.69 as Europe awakened to news of explosions in the Ukrainian capital of Kyiv, the major city of Kharkiv and other areas. The DAX in Frankfurt plunged 4 per cent to 14,047.18 and the CAC in Paris lost 3.6 per cent to 6,537.32.

The futures for Wall Street’s benchmark S&P 500 index and the Dow Jones Industrial Average were off 2 per cent.

That was on top of Wednesday’s 1.8 per cent slide for the S&P 500 to an eight-month low after the Kremlin said rebels in eastern Ukraine had asked for military assistance. Moscow had sent soldiers to some rebel-held areas after recognizing them as independent.

Putin said Russia had to protect civilians in eastern Ukraine, a claim Washington had predicted he would make to justify an invasion.

President Joe Biden denounced the attack as “unprovoked and unjustified” and said Moscow would be held accountable, which many took to mean Washington and its allies would impose additional sanctions. Putin accused them of ignoring Russia’s demand to prevent Ukraine from joining NATO and to offer Moscow security guarantees.

Washington, Britain, Japan and the EU earlier imposed sanctions on Russian banks, officials and business leaders. Additional options include barring Russia from the global system for bank transactions. 

Additional reporting by AP