What happened
Many cryptocurrencies are being slammed today. Cardano ( ADA -0.20% ) was sinking 7.4% as of 11:58 a.m. ET. Chainlink ( LINK 0.22% ) was down 7.5%. Cronos ( CRO -0.53% ) and Polkadot ( DOT 0.86% ) were tumbling 5.4% and 4.2%, respectively. And all of these digital tokens experienced even greater declines earlier on Thursday.
Russia’s invasion of Ukraine is weighing heavily on markets. Few cryptocurrencies or stocks are rising in the wake of the overall sell-off.
So what
Why would Russia’s move have such a big impact on cryptocurrencies? It boils down to risk. When investors believe that their money is at greater risk, they’re more likely to shift funds into safer assets. Such “risk-off” scenarios have hurt growth stocks in the past. Now it’s happening again, with cryptocurrencies also being pulled down.
The only cryptocurrencies that are largely immune to risk-off downswings are stablecoins pegged to fiat currencies. However, Cardano, Chainlink, Cronos, and Polkadot are not stablecoins.
Any geopolitical crisis could cause a risk-off market. The current situation is arguably worse because cryptocurrency prices were already slumping.
It’s important to note, though, that the long-term prospects for Cardano, Chainlink, Cronos, and Polkadot shouldn’t change as a result of the Russian invasion of Ukraine. Each of the four cryptocurrencies offers advantages that won’t be diminished whatsoever.
Cardano launched smart contracts on its network last year, a move that makes it more competitive with Ethereum. Chainlink allows real-world data to be brought into any blockchain. Cronos is the native token of the popular Crypto.com exchange (and until recently was known as Crypto.com Coin). Polkadot provides a great foundation for Web3 apps.
Image source: Getty Images.
Now what
Some investors could view the sell-off as a great time to buy these cryptocurrencies. Others could worry that the Russia-Ukraine conflict could cause an even deeper crypto crash. There’s no way to know for sure what is going to happen next.
If you’re trying to time the cryptocurrency market, the old Latin phrase “caveat emptor” (“buyer beware”) comes to mind. However, investors with a longer time horizon might at least consider nibbling at some of these cryptocurrencies with their prices much lower than they’ve been in the recent past.
In some respects, the current downturn makes cryptocurrencies less risky than they were when their prices were significantly higher. Anyone who was enthusiastic about Cardano, Chainlink, Cronos, or Polkadot a month ago should be even more bullish now.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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