He just formally recognized the sovereignty of Donbass/Luhansk. Obviously the next step is those two new "sovereign countries" inviting Russian troops in for security, and Russia obliging. If Ukraine in any way tries to prevent that, that's "Ukrainian aggression" and will be cause for "counterattack" by Russian military. Donbass and Luhansk are not a huge percentage of total Ukraine and Ukraine did not have control of them for a long time already anyway. There will be enormous pressure from "the West" for Ukraine to just sit and take it and, frankly, that seems like the best strategy for Ukraine no matter how humiliating it is. The question is, will Ukrainian "aggression" be manufactured by Russia to create a pretext for "counterattack". And, of course, I suspect that if the whole thing is limited to Donbass/Luhansk, Biden et al will not do anything except lament the situation. No sanctions.
There must and will be sanctions, full stop. If Russian goes full out and do a regiment change immediately, that there might be room to negotiated. Anything short of removal of Ukraine government, pains will be long lasting and we are back to Cold/Hot Wars with both China and Russia.
Russian troops have entered the moment Putin signed the documents. That is official. Small scale kinetic clash is very possible as Ukraine does not really control own army and there are way too many independent contractors and CIA operatives. Anyways, BTFD!
Not by a long shot. It's just starting now. Looks like we'll be revisiting March 2020 lows. Fine by me. Algos crashing the markets on nothing-burgers is getting old. I'm tried of it.