The world woke up to a “red sea” not necessarily limited to financial markets when Russia declared war on Ukraine early Thursday morning.

The traditional financial markets, along with the cryptocurrency markets, have been bearish over the past week and saw a rapid decline early Thursday. With the exception of crude oil prices, which jumped to an eight-year high above $100, most stocks lost more than 5%.

Thursday’s Russian invasion unleashed bears, leading to a $500 billion sale in the cryptocurrency market, with most cryptocurrencies losing critical support and trading at three-month lows. The value of the cryptocurrency market fell by 10% during the early morning opening hours in Asia, as it fell below $1.5 trillion.

Bitcoin (BTC) is a hedge against inflation and many expect the price to show resilience during the crisis. However, Sam Bankman-Fried, CEO of global derivatives and spot cryptocurrency exchange FTX, believes that the BTC drop was not a surprise.

In a market scenario, Bankman-Fried said the war triggered a monetary crunch in the market, which led to sell-offs in both the traditional and cryptocurrency markets. The decline in the price of Bitcoin is also due to its increased correlation with the Nasdaq and the S&P 500, which recently reached a two-year high.

Bitcoin’s connection to traditional markets. Source: Kaiko
Bankman-Fried notes that the currency is stabilizing in Eastern Europe, suggesting that investors in Eastern Europe may be looking for alternatives due to the invasion of Ukraine, which could make BTC an obvious choice.

Bankman-Fried divided investor thinking into two types: fundamental and algorithmic. He explained that fundamental investors look at market situation and sentiment, while algorithmic investors prefer data.

Related: Bitcoin Drops 12% as Russian Ruble Reaches All-Time Low Against the US Dollar Due to ‘Military Operation’ in Ukraine

Market fundamentals point to a buying opportunity because bitcoin is insurance against the crisis, while algorithmic investors prefer selling data and the relationship of bitcoin to the stock market.

According to this theory, the clash between fundamental investors and algorithms has left the current Bitcoin market halfway.

Source: CoinTelegraph