Bitcoin battles with life support at $37,000 due to the Russia-Ukraine conflict; what to expect?

Bitcoin extended its downward spiral on Monday, to the beat of war drums between Russia and Ukraine. The digital currency par excellence lost vital support at $40,000 over the weekend and left a low below the next control zone at $37,000 on Monday. Despite achieving a close near $38,000, according to CoinMarketCap data, the crypto currency is fluctuating around the aforementioned important support and threatens to extend its declines.

Bitcoin has been behaving as a risk asset for weeks now and its reaction to the latest escalation of the conflict on the Ukrainian border has once again proved right those who question its hedging role in times of crisis. Russian President Vladimir Putin ordered Russian Armed Forces to enter the Donetsk and Lugansk regions, whose independence Russia recognized on Monday.

While the digital currency held up over the past month of tensions, recent events have finally scared off short-term investors and the critical $40,000 support has been lost. "Now, the challenge for the queen of the 'cryptos' will be to hold the support of $36,670, an interesting area that served as support for the rebound generated a few days ago," stated analysts at IG.

However, pessimism is taking hold of the experts, since the digital currency has suffered sharp falls after unsuccessfully confronting the $45,000 resistance, and there are many who believe that the $30,000 level will come back into play. However, "on the side of the supports, the most important of them all is at the January lows at $32,855," warned José María Rodríguez, analyst at Bolsamanía.

"Geopolitics, for now, has replaced inflation as the main driver of traditional markets and cryptocurrencies," noted Antoni Trenchev, co-founder and managing partner of Nexo, quoted by 'Livemint.com'. Trenchev saw last summer's lows around $29,000 as a "last line in the sand," but expected Bitcoin to hold at $30,000, with significant buying interest at that level.

Katie Stockton, founder of Fairlead Strategies, warned, meanwhile, that technical analysis is not in Bitcoin's favor either. The token, which has already eroded the aforementioned long-term support level at around $37,600, will face its next key technical test at $27,200, the expert noted.

As if the tensions between Russia and Ukraine were not enough, a second blow to cryptoasset prices took place over the weekend with the news that a major hack of NFTs took place. The U.S. marketplace for non-fungible tokens (NFTs), OpenSea, recorded a 'phishing' attack last weekend in just three hours. The hack was valued at nearly $2 million in unique tokens belonging to 17 marketplace members. Panic among traders of these assets on social media drove the price down further.

ALTCOINS BEAR THE BRUNT

As for the 'altcoins' the picture is even worse, with some tokens leaving drops of 13% on average, such as Cardano, Solana or XRP. Overall, the global cryptocurrency market has plummeted 7% and lost more than $100 billion of investor wealth in the last 24 hours, with total capitalization standing at $1.65 trillion.

The price of Ethereum (ETH) is down 6.92% and currently trades on the edge of $2,500 support with a market cap of $301 billion. Ethereum´s price must return to at least the 50% Fibonacci retracement at $2,900 to avoid further bearish action towards $2,200.