The prices of bitcoin, ether and other cryptocurrencies plunged after Russia invaded neighboring Ukraine, a loss in value that challenges the widely held notion that digital currencies can serve as a safe haven.

Bitcoin, the best-known cryptocurrency, dropped below the $35,000 level, which cut 8% from its price. Ether, another widely owned digital coin, fell more than 7% to under $2,500.

Gold, the conventional asset of crises, rose above $1,970 per ounce on Thursday, its highest level in roughly a year and a half, according to Trading Economics. 

Though crypto prices rebounded on Thursday, the sharp slide calls into question the popular belief among crypto evangelists that bitcoin, ether and cryptocurrencies generally can be defensive investments during times of geopolitical risk. Bitcoin, in particular, is seen as a hedge against global uncertainty and inflation, which will likely be stoked by rising oil prices caused by the Russian invasion.

"The idea of crypto being a safe haven should be dead," George Monaghan, an analyst at GlobalData, said in a note. He added that believers would likely continue to have faith in cryptocurrencies, saying "the interest-understanding balance is just too skewed." 

Cryptocurrencies are digital assets that are recorded on a blockchain, a distributed digital ledger that can't be altered. They usually aren't backed by an underlying asset, such as fiat currency.

Bitcoin was the first cryptocurrency to gain widespread acceptance and is favored in part because the total outstanding balance of the coins is fixed, which proponents say will control inflation.

Though US inflation rose 7.5% in January – the most it has since February 1982 – crypto prices have struggled to hold ground. 

Bitcoin prices peaked in November, before falling sharply in January. The price of bitcoin started to recover in February. However, bitcoin prices started sliding after a high on Feb. 10. Prices slumped further with the invasion, which came after months of tension between Russia and Ukraine.

The total market cap for cryptocurrency currently sits at roughly $1.7 trillion, slightly above the market cap 24 hours ago, according to data from CoinMarketCap. 

James Royal, a principal writer at CNET sister site Bankrate, said cryptocurrencies shouldn't be viewed as safe investments because they aren't backed by assets or business cash flows.

"Their price relies solely on traders' sentiments," Royal said. "When traders become more optimistic, cryptocurrency prices rise. When traders become gloomy, crypto prices fall."

That's why Royal suggested first-time investors in digital assets should proceed with caution.

"Those who are looking to get started must understand that they should not put in more than they're willing to lose," he said.