Crypto Market Capitalization Slumps to $1.5T as Russia Attacks Ukraine

The market capitalization of all cryptocurrencies slid to as low as $1.5 trillion, losing almost 9% in 24 hours, as Russia launched a “special military operation” against Ukraine. The prospect of damage to the global economy also weighted on broader financial markets, with the Stoxx 600 Europe index falling more than 3%, micro Nasdaq 100 futures down 2.3% and Russia's MOEX equity index dropping a record 28%.

In the past 24 hours, bitcoin fell 8%, touching $34,725 in early Asian hours. The fear & greed index – a tool used to calculate public sentiment of the crypto market – fell 2 points to a “fear” level reading of 23.

“The aggravation of tension around Ukraine exerted pressure on risky assets,” said Alex Kuptsikevich, a financial analyst at FxPro, in an email to CoinDesk. “There are growing risks of escalation associated with the introduction of Russian troops into Donbass. In such a situation, risky assets may continue to decline further.”

Donbass refers to two breakaway regions of Ukraine under the control of separatist groups.

The slide in cryptocurrencies shows the sector remains a nascent asset class compared with traditional markets, Kuptsikevich said. “We see that cryptocurrencies are selling stronger than developed world stocks, confirming the risky nature of these assets and how they are not a replacement for gold.”

Liquidations, or losses on crypto-tracked futures, reached over $250 million in early Asian hours as major cryptocurrencies tumbled more than 10%. In the past 24 hours, ether lost 12% of its value, with Cardano’s ADA and Solana’s SOL falling as much as 16%.

Investors, however, continue to hold bitcoin according to metrics tracked on analytics tool Glassnode. The wallets of long-term investors hold record volumes of BTC at 76.5% as of Thursday morning despite the drop in prices, suggesting some investors are continuing to nurture the purported hedging capabilities of the world’s largest cryptocurrency.