Solana, Fantom Hard Hit Amid Russia-Ukraine Fears
The crypto market has continued to fall amid rising tensions between Russia and Ukraine.
- The crypto market is de-risking amid rising tensions between Russia and Ukraine.
- Layer 1 coins led the drawdown, with several dipping 10% over the past 24 hours.
- Russia's stock market hasn't fared any better, with the MOEX dipping over 10% yesterday and continuing its downward trend today.
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Spooked by the escalating tensions between Russia and Ukraine, the crypto market has continued to fall. Layer 1 coins have recorded outsized losses, with Solana, Avalanche, and Fantom dipping more than 10% in the past 24 hours.
Layer 1s Record Double-Digit Drawdowns
Geopolitical factors are dragging crypto assets lower.
The crypto market took a beating today as investors went risk-off amid reports that Russia had sent troops in the form of peacekeepers into Ukraine. The escalating tensions seem to have generated uncertainty in the markets, leading investors to rotate their assets away from the far end of the risk curve.
Layer 1 coins appear to have suffered the hardest from the downturn. Solana, Avalanche, and NEAR, have all registered double-digit drops, and are trading down 10.6%, 10.3%, and 10.5% today. The two largest cryptocurrencies also took a hit, albeit a lesser one. Bitcoin is down 4.2% over the past 24 hours, while Ethereum has fallen 5.6%. Fantom, an Ethereum-compatible Layer 1 network, has fared worse than most, dropping 13.6% on the day before recovering slightly.
Metaverse and gaming tokens such as Decentraland and Axie Infinity also declined alongside the broader market; MANA has dipped 9.3%, and AXS is down 8.1%. Both are trading significantly down from their record highs. MANA is currently trading at $2.60, a drop of 56.5% from its all-time high of $5.85 set three months ago. AXS, meanwhile, is trading at around $50, down roughly 70% from its record high of $164.
Today’s plunge follows weeks of sideways or downward price action in the crypto markets. Several geopolitical and macroeconomic factors have affected crypto asset prices. U.S. inflation rates recently hit 40-year highs, with the Federal Reserve signaling interest rate hikes in response. Rising tensions surrounding the Russia-Ukraine conflict and the regulatory uncertainty around President Biden’s anticipated Executive Order on crypto have also weighed on the market.
Markets don’t react well to uncertainty, and with cryptocurrencies being on the far end of the risk curve, they’re usually the first assets investors sell during market turbulence. Layer 1 coins and Metaverse tokens are often regarded as higher-risk crypto investments, resulting in sharper drops than Bitcoin or Ethereum when the market moves lower.
However, traditional stocks haven’t fared much better either. For example, the MOEX, a major stock market index tracing the 50 largest and most liquid Russian companies, dropped around 10% yesterday following Vladimir Putin’s public address concerning the Ukraine issue.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.