Bitcoin and other cryptocurrencies fell on Monday as investors fled risky assets amid turmoil sparked by the conflict in Ukraine, with the world's largest cryptocurrency falling below $40,000.
According to CoinDesk, Bitcoin has fallen 1% in the last 24 hours to just over $38,000. As of Friday, the stock was trading nearly $42,000, surging to $45,000 at one point last week.
Smaller counterpart Ether also moved lower, falling 2.5 percent to more than $2,500. The tokens underpinning the Ethereum blockchain network reached a high near $2,750 on Friday and have broken through $3,000 last week.
Bitcoin and Ethereum remain well below the all-time highs of $68,990 and $4,865, respectively, reached in early November.
Smaller cryptocurrencies, or "alternative coins," such as Solana, Cardano, and Litecoin, also showed similar price volatility, all falling 2% to 5% on the day and down nearly 10% since last Friday.
Cryptocurrencies have recently seen a spike after Russia invaded Ukraine.
As both Ukrainians and Russians turn to Bitcoin and other tokens to deal with the economic turmoil suffered by countries battered by war and sanctions, anonymous digital assets are once again in the spotlight.
In theory, Bitcoin and its peers should trade independently of the mainstream financial markets. However, cryptocurrencies have proven themselves correlated with other risk-sensitive assets, such as stocks, this year.
As investors fled the stock market on Monday in favor of buying safe havens such as gold, cryptocurrencies found themselves part of a sell-off.
"Bitcoin is still a risk asset, although many would argue that it is also a safe haven given the war in Ukraine," said Edward Moya, an analyst at the brokerage Oanda.
Major European stock indexes fell about 3 percent on Monday, and the U.S. Dow Jones Industrial Average and S&P 500 are expected to fall sharply as oil prices soar to their highest levels since 2008.
The conflict in Ukraine has brought turmoil to commodity markets, and the latest catalyst for a spike in oil prices is a possible ban on Russian crude imports by the United States and its allies, which will prolong already strained global supplies.
Continued rise in oil prices could, in turn, trigger inflation, prompting central banks to tighten monetary policy more aggressively.
This is the main headwind facing the stock market as well as cryptocurrencies so far in 2022.
In addition, Tesla's stock rose last week as oil prices soared and the company received permission for a new plant in Germany. This week, news from China should be an important factor in stock market trading.
Sales and production data for Tesla's Shanghai plant will be released in the middle of this week.
Tesla investors have also improved their mood after last week's earnings report.
While both the S&P 500 and the Dow Jones Industrial Average fell 1.3 percent, U.S. stocks rose 3.5 percent.
Benchmark crude prices rose 26 percent last week. Gasoline prices followed the price of crude oil and became national news. From the perspective of marginal profit, high oil prices are conducive to the sales of electric vehicles.
The higher the price of gasoline, the faster electric vehicle buyers will be able to make up for higher initial purchase prices with lower fuel costs.
In January, Tesla delivered about 60,000 vehicles at its Shanghai plant. That's down from about 73,000 units delivered in December last year.
The downward trend in January was the same as the delivery figures for NIO, XPeng Auto (XPEV) and Rio Tinto Auto.
The three companies delivered a record 40,576 vehicles last December, with total sales in January just under 35,000.
Some domestic demand may have advanced to the last month of 2021. Some incentives for China to buy electric vehicles fell in early 2022.
In February, Chinese electric car makers had to deal with the Spring Festival holiday.
Together, NIO, XPeng and Li delivered nearly 21,000 vehicles in February.
Tesla's production doesn't have to fall 40 percent like the first three. Tesla exports cars from chinese factories to Europe. But the holidays will have an impact on Tesla's production plans, just like other Chinese manufacturers.
Tesla's shipments of about 50,000 units, down from about 60,000 in January and factory production in February of between 50,000 and 60,000, should be enough to support inventory.
Tesla shares have fallen about 21 percent so far this year since trading began on Monday.
The Nasdaq Composite has fallen about 15 percent so far this year.