Bitcoin drops to 1-week low as oil shock batters risk assets

[SINGAPORE] Bitcoin dropped below US$38,000 on Monday as global markets tumbled on concerns that Russia's invasion of Ukraine, and the spiralling commodities prices it unleashed, could have a wider and longer-lasting impact than previously thought.

The largest cryptocurrency fell as much as 3.7 per cent to US$37,596 early Monday in Asia, its lowest level in a week, before recovering slightly. Ether declined as much as 4.6 per cent to US$2,508.80, the lowest since Feb 24. Other top tokens like Solano, Cardano and Avalanche also fell, CoinGecko noted.

Bitcoin has now given up all of the gains it notched up early last week, and is again trading broadly in line with other risk assets. Monday's losses came as oil soared on concerns that the US and its allies might prohibit Russian oil imports, putting more upward pressure on already elevated inflation.

For most of this year, Bitcoin has been trading sideways, failing to sustain any advances about US$45,000. Edward Moya, senior market analyst at Oanda, wrote in a note on Friday that "Bitcoin's broadening formation could see selling pressure look to test the US$37,000 area."

Russian President Vladimir Putin said on Sunday that the war will continue until Ukraine accepts his demands, pummelling hopes for a quick resolution. With Russia's invasion nearing the two-week mark, a debate has been raging about whether cryptocurrencies are a hedge against increasing willingness among governments to seize financial assets - or a convenient sanctions-evasion tool that needs stricter policing.

Lloyd Blankfein, the former chief executive officer of Goldman Sachs Group Inc, in a tweet late Sunday said crypto prices currently do not appear to support the former argument.

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