Crypto Market Changes And The Russia/Ukraine Conflict
The conflict between Russia and Ukraine, which erupted on February 24, 2022, when Russia launched a full-scale assault on Ukraine, is not the first war to be waged in the age of cryptocurrency.
However, it is the first war in which crypto has played a prominent role. In fact, it has been dubbed “The World’s First Crypto War.”
On the Ukrainian side, donations have brought in more than $50 million in cryptocurrency, which the government has said will be used to purchase critical supplies.
On the Russian side, the purchase of cryptocurrency with rubles increased dramatically in the early days of the war, signaling what some perceive as a move by Russia to get around the financial sanctions being imposed on it by governments around the world.
While it remains to be seen what effect crypto will have on the outcome of the conflict, it has already become clear that the conflict is affecting the value of crypto.
In the early hours of the war, the total crypto market lost approximately 5 percent in 24 hours. Bitcoin fell from $37,000 to $35,500 in less than half an hour.
“Even though war is never as good initially for any particular market, oftentimes markets generally do recover after the announcement of an overall war,” says Jerremy Newsome, CEO of Real Life Trading and a top expert in the field of stock market education.
Real Life Trading is a trading education platform that helps new traders to trade profitably in both stock and crypto markets by providing courses and mentoring.
Providing support for what he calls “Buy the Invasion,” Newsome cites a pattern of dip and recovery shown in markets during the Vietnam War, the Gulf War, the Afghanistan War, the Iraq War, and the Crimean Crisis.
The initial dip of Ethereum at the start of the Russia/Ukraine conflict in late February mirrored the coin’s behavior one month earlier, explains Newsome.
At that time, the dip was followed by a considerable increase in value.
“Buyers who were profitable in January on Ethereum and other cryptos were able to profit approximately 35 percent from the market’s move at that point,” says Newsome.
“Can it happen again? I think the likelihood is great. And I am personally a liquid net buyer on Ethereum and other cryptos when they are at those levels.”
As the war moved into its second week, Newsome’s predictions proved true, with Bitcoin and Ethereum gaining considerable ground and many other cryptocurrencies holding steady.
Newsome also points out that the overall decline in crypto values that started in November 2021 is not as much a reason for concern as some report, especially when compared with the trends shown in the stock market.
He compares Ethereum’s 50 percent decline with the 68 percent decline of PayPal stock, the 69 percent decline in Block stock, and the 80 percent decline in Peloton stock.
While crypto may not have fallen as far as the stock market, it did fall, disproving, at least for now, the theory espoused by some that crypto represents a hedge against wars and other events that are known to roil the market.
Could crypto prove to be more stable than stock markets if the Russia/Ukraine conflict is extended? That data will most likely be distorted by concerns over a US Federal Reserve interest rate increase, which is reportedly on track to be implemented in mid-March and which will most likely influence the crypto market.