Continued tension in Russia and Ukraine sparked market concerns, Bitcoin fell below $41,000

Worries over continued tensions in Russia and Ukraine have re-emerged in global markets, including risk assets, with bitcoin falling below $41,000, near its 50-day moving average.

Data shows that Bitcoin once fell by more than 7% on Thursday, while Ethereum once fell by more than 8%. As of press time, Bitcoin’s decline narrowed to 3.21%, at $40,576.08 per piece; Ethereum’s decline narrowed to 3.52%, at $2,883.58 per piece.

Continued tension in Russia and Ukraine sparked market concerns, Bitcoin fell below $41,000

"The geopolitical situation in Russia and Ukraine is having a material impact," said Barbara Matthews, founder and CEO of BCMStrategy. "But I think there is a lot of uncertainty and volatility in the market about how much monetary policy will continue to create. A little bit undervalued by the market.”

On Wednesday, the U.S. central bank released the minutes of its January Monetary Policy Committee meeting, which reinforced the central bank's intent to move quickly to contain rising inflation by tightening monetary policy. Markets seem to be anticipating the Fed's stance, with relatively mixed or dovish reactions. Bitcoin has recently shown a strong correlation with the movements of U.S. stock indexes, even rising alongside the S&P 500 in the minutes following the release of the minutes.

Earlier this month, Bitcoin’s 30-day correlation with the Nasdaq Composite hit 0.73, close to a five-year high of 0.74 set in 2020; the coefficient currently stands at 0.62. This suggests that the two asset classes are moving similarly, with investors viewing digital assets alongside Nasdaq's iconic tech stocks as "risk assets."

Matthew Sigel, head of digital asset research at VanEck Associates, said a sharp drop in the stock market, or a “disorderly spike” in crude oil and bond yields, could lead to a sharp fall in cryptocurrencies. However, he noted that Bitcoin’s volatility appears to be on a long-term downtrend, with the Nasdaq 100’s standard deviation move above Bitcoin’s five-year average, “Bitcoin has consistently outperformed stocks, although Volatility is still high, but it has been trending down relatively."