Russia-Ukraine Tensions Wipe $160 Billion Off Crypto Markets; Stablecoin Demand Rises

• Crypto market cap sinks 8.1% this week
• Stablecoins see largest volumes
• Bitcoin price could fall to $36,000 this month- Analyst

Concerns over a possible Russian invasion of Ukraine weighed on crypto markets this week, wiping out roughly $160 billion in market value as investors fled into relatively safer asset classes.

Cryptocurrencies, along with broader markets, fell amid warnings from Western leaders that a Russian invasion of Ukraine was imminent. Safe-haven assets including gold, U.S. Treasuries  and stablecoins benefited.

Trading volumes rose through the week to $72.3 billion from $64.5 billion.

With crypto markets trading more in line with conventional asset classes, many have begun questioning whether the space, particularly bitcoin, is a viable bet against volatility. The world’s largest cryptocurrency briefly broke below $40,000 on Friday for the first time in two weeks.

“Bitcoin has clearly lost its function as a defensive asset lately, showing almost no correlation with gold, which was in high demand on Wednesday and Thursday,” Alex Kuptsikevich, senior financial analyst at FxPro said in a mailed statement.

“It is quite possible that from the end of January to mid-February, we saw a pullback after the momentum of the decline, and now a new step down is being formed. The nearest goal with this push down is located near this month lows around $36,000.”

Earlier this year, concerns over rising inflation and U.S. interest rate hikes had also unsettled crypto markets, with most major tokens falling in line with a rout in equities and foreign exchange.

Stablecoins shine

A large amount of crypto trade appeared to be directed towards stablecoins this week, as investors sought less volatile options, while still maintaining exposure to crypto.

Tether, the world’s largest stablecoin with a market capital of nearly $80 billion, had the highest volumes among its peers in the last seven days, with about $349 billion moved– nearly twice as much as that of bitcoin.

Binance USD and USD Coin also saw combined volumes of $48 billion. USD Coin in particular, saw increased interest after its operator Cirlce doubled the value of a deal to publicly list its shares.