Will the war affects the crypto market?
The Russia- Ukraine war is continuously raging on leaving hundreds if not thousands of casualties. The conflict affects not only the countryside of both warring countries but the whole world in particular. As I’ve mentioned in my previous articles the Russia-Ukraine war significantly disturbed the international trade or the world market which include the dramatic price hike of oil, natural gas, and other products, this is because both countries are one of the major providers of some products, especially Russia. Due to the continuous assault of Russia against Ukraine, western countries imposed their sanctions against the country which include the withdrawal of the biggest and most popular businesses such as McDonald’s, Ikea, H&M, etc. Companies that provide mechanical products such as airplanes, spacecraft, and many other companies also announced the closing of operation in response to the western sanctions. This article will tackle the effect of the war on the ever-volatile cryptocurrency.
Bitcoin (BTC) initially drop down since the invasion began but according to the article made by Wilson, and Howcroft published 20 days ago, Bitcoin, Binance coin, ripple, and ether significantly fall due to the invasion of Russia of Ukraine. Moreover, the article also shows that Bitcoin slides down because investors get rid of the riskier assets that slumped by as much as 8%. Additionally, Gailey A. in her article says that Bitcoin dropped below $35,000 and Ethereum fell below $2,400 as Russia invade Ukraine, furthermore, experts say that “as the war continues, volatility in global financial markets including cryptocurrency is sure to follow”, Doug Boneparth also says that war will cause a tremendous amount of volatility regardless of the assets’ class.
Can Cryptocurrency help Russia win the war?
There are over 17.3 million Russian who owns cryptocurrency. Cryptocurrency is also the fifth most popular investment vehicle in Russia. To answer the question of whether the digital currency can help Russia win the war, in my point of view, yes it can. In reality, both warring countries are encouraging donations to fund their causes by means of cryptocurrency (Ticha, V). The presence of blockchain technology might also aid Russia to bypass the international sanctions and circulate money without any trace since digital assets are decentralized and cannot be controlled by the government because of this reason, Ukrainian vice-Prime Minister Mykhailo Fedorov suggest and asked to block all the blockchain addresses of Russian users as countermeasures for the possibility of using digital currency to fund Russia’s invasion. However, considering a large number of crypto investors from Russia it is difficult for some crypto exchanges to ban these investors. Being said, I think if the crypto exchanges do ban Russia then it will significantly affect the market leading to a dramatic fall down.
In reality, controlling Russia’s invasion of Ukraine is possible through targeting its economic stability but we are not so dumped to omit the presence of digital assets especially when a country like Russia who’s more than 11% of the population is using digital assets. However, the fact that digital assets are decentralized and some of the owners are anonymous not to mention the difficulty to trace transactions, the plan of weakening Russia’s economic stability will only push them to use crypto to fund their causes without fail. In the end, it is the minor or small investors who will be affected the most. Traders are excluded since they don’t hold assets for long.
