Bitcoin and other cryptocurrencies fall on mounting Russia-Ukraine tensions

Digital currencies fell on Tuesday as geopolitical tensions over Ukraine roiled global markets.

Bitcoin was last down about 0.5% at $38,011.54. The cryptocurrency sank as low as $36,370 in early morning trade, its lowest level in more than two weeks.

Cryptocurrencies across the market also pared back steeper losses from earlier in the day. Ether lost 1.4%, while Cardano's ada fell 4.3% and XRP slid 6.9%.

Analysts attributed the drop to escalating tensions over the Russia-Ukraine crisis. Russian President Vladimir Putin on Monday ordered troops into two breakaway regions in eastern Ukraine, moments after declaring them as independent.

The move has fueled fears of a full-blown invasion, sending global stocks sharply lower as traders' appetite for risk declines.

"Bitcoin's safe haven narrative has almost completely fallen apart as the rising possibility of military conflict and the worsening U.S.-Russia relationship puts the wider financial market in risk-aversion mode," said Yuya Hasegawa, crypto market analyst at Japanese bitcoin exchange Bitbank.

Bitcoin is often touted by its proponents as a safe haven asset akin to gold, meaning it should offer a store of value in times of uncertainty.

However, the case for bitcoin as a sort of "digital gold" has broken down as more institutional investors have started to trade it, and the cryptocurrency is becoming more closely aligned with fluctuations in traditional markets like equities.

Hasegawa said bitcoin should trade within a range of $32,000 and $43,000 this week. John Kicklighter, chief strategist at DailyFX, said $39,500 is "first-level support heading into this week, but $32,500 looks more like the point of no return."

Bitcoin is now well below the all-time highs above $68,000, which it reached in November 2021, and some investors believe this is as good as it's going to get for the cryptocurrency for some time.

Du Jun, co-founder of crypto exchange Huobi, said the next bitcoin bull market is unlikely to take place until 2024 at the earliest, when the next so-called "halving" event is due to take place.

"Following this cycle, it won't be until end of 2024 to beginning of 2025 that we can welcome next bull market on bitcoin," Du said.

The bitcoin halving reduces the rewards that miners of the cryptocurrency get for verifying transactions, effectively squeezing the supply of new coins in issuance.