Bitcoin pulled back from its overnight high of $65,500, falling to $63,700 as it paused. The Russian Ministry of Defense issued a statement that Russia would conduct its first non-strategic nuclear weapons exercise since the Cold War, in response to provocations and threats directed at Russia by certain Western countries. Market warnings have urged caution as the intense volatility from the Russia-Ukraine conflict could sweep through the cryptocurrency world again.
Since the full-scale invasion of Ukraine at the end of February 2022, fighting between Russia and Ukraine has continued without respite, and the rift between Russia and Western powers has grown wider. This "nuclear exercise" involves non-strategic nuclear weapons, which generally have less destructive power and are intended to deter or destroy enemy troop concentrations. These weapons differ from strategic nuclear weapons designed for large-scale destruction.
According to the official statement from the Russian Ministry of Defense, this exercise will be conducted under the command of the Supreme Commander of the Russian Armed Forces, President Putin, and will involve the Southern Military District, air force, and navy. The goal is to ensure that troops and equipment are prepared to use non-strategic nuclear weapons whenever needed.
Russia emphasized, "We will unconditionally ensure the territorial integrity and sovereignty of Russia and respond to the provocative statements and threats made by some Western officials against Russia."
Notably, this isn't the first time Russia has used its nuclear forces to threaten Western countries during the Russia-Ukraine war. In March 2023, after the UK decided to supply Ukraine with depleted uranium tank shells, Russia announced it would deploy non-strategic nuclear weapons in Belarus, near NATO borders.
Multiple Western nations have publicly criticized Russia's sudden announcement. Last week, France reiterated that if the Russia-Ukraine situation deteriorates, it would not rule out deploying French troops to Ukraine to assist in combat. The UK has also stated that its long-range missiles sent to Ukraine could be used to strike targets inside Russia. The German government announced it would not send representatives to Putin's new presidential inauguration.
Currently, it's unclear how Russia's planned nuclear exercises will affect the market. However, past regional conflicts like the Russia-Ukraine war and the Israel-Palestine conflict have often spilled over into cryptocurrency markets, causing Bitcoin to fluctuate. If geopolitical risks increase, Bitcoin is likely to be impacted as well.
With the approval of the U.S. and Hong Kong spot ETFs, Bitcoin's current trend is more linked to the stock market and risk assets than safe-haven assets like the U.S. dollar and gold. This means that worsening tensions in the Middle East or Russia-Ukraine could affect Bitcoin's bullish trajectory.
After reaching $65,500 earlier in the week, Bitcoin began a downtrend, falling to a low of $62,700 and erasing overnight gains, before slightly recovering to the $63,700 level.
In the Wall Street Bitcoin spot ETF market, Friday reversed the trend of capital outflows with a net inflow of $378 million in a single day.
Unusually, Grayscale recorded its first net inflow on Friday, with an inflow of $63 million.
Source: SoSoValue
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