What happened
The prices of Shiba Inu (SHIB 1.43%), Dogecoin (DOGE -2.03%), and Cardano (ADA 1.40%) were all plummeting today on news of potential conflict between Russia and Ukraine. Crypto investors may also be concerned that the U.S. government may soon take a closer look at regulating cryptocurrencies.
Shiba Inu was down by 8.6%, Dogecoin had fallen by 5.3%, and Cardano tumbled 6.8% over the past 24 hours.
So what
Yesterday, Russian President Vladimir Putin said that he formally recognized the independence of two rebel-held regions in Ukraine and issued an order for Russian troops to go into those areas.
Image source: Getty Images.
Those moves triggered U.S. and European Union sanctions on those breakaway regions, with the potential for direct economic sanctions on Russia if the situation escalates.
Crypto investors have been concerned about rising tensions in Europe and have sent altcoins tumbling, along with the price of Bitcoin, which is down 1.8% over the past 24 hours.
This adds to the volatility that the crypto market had already been experiencing over the past few months thanks to rising inflation -- which is at a 40-year high -- and the increasing potential that the Federal Reserve will raise interest rates throughout 2022.
The Fed could raise rates as soon as next month, and will likely do so several times throughout this year, which could help tamp down inflation but could also end up stunting economic growth in the U.S.
Additionally, Shiba Inu, Dogecoin, and Cardano investors may also be concerned that President Biden may issue an executive order on cryptocurrencies as early as this week.
The order is expected to help government agencies come up with a strategy for cryptocurrency regulation. The order could be the first step toward more oversight of the burgeoning crypto market.
Now what
Any type of talk about regulating cryptocurrencies typically causes crypto prices to drop, so it's not surprising to see Shiba Inu, Dogecoin, and Cardano falling based on investors' fears about increased government oversight of cryptocurrencies.
And with rising tensions in Europe already adding to pessimism in the crypto market because of sky-high inflation, the prices of Shiba Inu, Dogecoin, and Cardano will likely continue to be volatile in the short term.
Investors should certainly keep a close eye on whether or not the Biden administration issues any new guidance for cryptocurrencies. It's becoming increasingly clear that governments around the world want to have more of a say in how cryptos are used, and it's still unclear how new regulations will impact the long-term prices of altcoins.
Additionally, macroeconomic events and instability in areas of the world will continue to influence the sentiment of crypto investors as well as stock investors. All of which means that cryptocurrency investors may want to prepare themselves for more volatility over the next few months.
