- Russia and Ukraine are reportedly at the brink of war – an event analysts say will make significant strikes at the crypto market.
- Digital currencies like Bitcoin have been pivotal in Ukrainian donations and preventing financial censorship in other countries.
Russia has reportedly been gearing up to invade Ukraine, with Russian President Vladimir Putin having sent an estimated 100,000 troops to its border with Ukraine. To prevent the incursion, Putin demanded that the West guarantee the military alliance NATO will not be expanded. This involves blocking former Soviet Union republics, such as Ukraine, from joining NATO, among other actions. The president has also repeatedly suggested that Russia and Ukraine would function better as “one people.” So how exactly would a Russia-Ukraine crisis affect the crypto space?
Russia – Ukraine war and its impact on crypto
According to two market analysts, such an event would send crypto assets on a downward spiral to doom. IG market analyst Kyle Rodda says that the market is already faced with uncertainty due to rising inflation, looming interest rate hikes by the Fed, and the likelihood of war between Russia and Ukraine. According to him, these are some of the factors contributing to recent market volatility. Lead crypto-asset Bitcoin (BTC) has been oscillating in the $40K level for the past week. It now trades at $44, 237 having gained 4.8 percent in the past day.
Josh Gilbert, another market analyst from eToro concurs with Rodda, saying the market hates and reacts badly to uncertainty.
If political tensions intensify between Russia and Ukraine, it’s likely that crypto will come under pressure. As a result, it may also potentially test the lows of 2022 once again. However, we are currently in a position where global economic instability seems to be the ‘new normal.
Financial insurance with digital assets
But even then, if there is anything the Russia-Ukraine political turmoil has proven, it is that Bitcoin and other crypto-assets play an important role in preventing financial censorship. Their decentralization and borderlessness mean the public will still have access to their funds even if banks shut down in the aftermath of a crisis.
An executive from US investment company Miller Value Partners has told CNBC the same, saying crypto assets are financial insurance against catastrophe. He points out that residents of Lebanon and Afghanistan were unable to access money in the bank following civil wars.
Other than that, Bitcoin has also been at the center of financial donations to Ukrainian volunteer and hacktivists groups. Some of these funds have been channeled to buy military equipment for the government.
Read More: Ukraine using Bitcoin to crowdfund war with Russia – Report
The latest report says Putin has some of Russia’s troops withdrawing from the Ukrainian border following diplomatic talks with Western allies. However, artillery and tanks are still poised in “attack positions,” making the invasion seem “imminent and highly likely,” according to British politician Liz Truss.
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