Ongoing uncertainty could also push the world's biggest cryptocurrency below $29,000 — a price that has been held since January 2021.
While Moscow maintains the soldiers deployed to Donetsk and Luhansk are on a "peacekeeping" mission, these claims have been rejected by U.S. officials.
The West fears this is an "attempt to create a pretext for a further invasion" — and could open the door to a more substantial military operation in Ukraine.
Tanks and armored personnel carriers have been seen on the outskirts of Luhansk, and Western nations are now preparing to impose sanctions on Russia.
BTC's performance invalidates the theory that the cryptocurrency serves as a safe haven for investors seeking protection during periods of market turbulence.
By contrast, gold has largely held on to its gains and the price of a barrel of oil has jumped. As 22V Research's John Roque wrote in a research note:
"In the globe’s latest maelstrom — U.S./Russia/Ukraine — Bitcoin, the asset purported to be the answer to every question, has quietly weakened and is notably underperforming its arch-enemy, gold."
With BTC closely correlated to the stock market right now, the cryptocurrency's fate seems tied to how Wall Street reacts to Russia's next moves. At the weekend, U.K. Prime Minister Boris Johnson pointed to evidence that suggests the Kremlin is planning "the biggest war in Europe since 1945."
OANDA analyst Edward Moya wrote in a research note:
"Bitcoin's rollercoaster ride won't end anytime soon, but it could get ugly if Wall Street sees a major selloff if investors begin to expect a prolonged military conflict."
Russia has recently unveiled proposals that would legalize crypto investments for its citizens, but continue to prohibit digital assets from being used as a payment method. Meanwhile, Ukraine has passed a bill to legalize cryptocurrencies — with the country's deputy prime minister suggesting this will help Ukrainians "protect their assets from possible abuse or fraud."