Russia-Ukraine War Could Have a Major Impact on Crypto
The war between Russia and Ukraine has started. With various financial markets in a frenzy, there's increased volatility. Investors are worried about their cryptocurrency holdings. Is crypto affected by war?
Crypto prices have been dropping within the last 24 hours and it’s possible that the situation could get much worse. Some holders have panicked and sold their assets. It will be interesting to see how Bitcoin and other tokens rebound after the battle between the two countries subsides.
Is crypto affected by war?
The tension between Russia and Ukraine has been ongoing since January and heated up over the past few weeks. In the last two weeks, Bitcoin and other cryptocurrencies have fallen by more than 20 percent.
The price drop has been widely linked to the tension between the two countries, so it’s very possible that war could affect crypto prices. When it comes to crypto trading volume, war will definitely have an impact because it decreases internet access and crypto trading.
The Russia-Ukraine war has affected crypto.
According to India Today, the global trading volume for crypto fell by approximately 190 percent in the last 24 hours since Russia declared war against Ukraine. A chart by CoinMarketCap shows that the total crypto market has fallen by about 10 percent, which resulted in the market losing $160 billion in value.
Crypto has been in a bear market since October 2021—slightly before the tensions between Russia and Ukraine started to heat up. You could infer that crypto prices were going to fall down regardless because of the significant downtrend most tokens are in right now. However, two countries at war certainly won't help the situation.
As crypto becomes more widely adopted, these assets move increasingly similar to how the stock market moves. Many of the top stocks in the world have also been in a bear market since October–November 2021. Both types of assets have shown huge amounts of volatility since then.
A report by the National Bureau of Economic Research found that war lowers the value of U.S. equities by about 15 percent. So, if crypto is behaving more like stocks, then it’s very possible that war can lower the value of these digital coins.
What happens to Bitcoin during war?
There hasn’t been a war of this magnitude where Bitcoin and other cryptocurrencies have been traded this heavily other than the Afghanistan war. That war technically lasted from 2001 to 2021, where there was a peak of 110,000 soldiers in Afghanistan in 2011, according to History. With Bitcoin being created in 2009, its price has increased by over 9.8 million percent up until the end of 2021. So, throughout the span of the Afghanistan war, Bitcoin essentially skyrocketed.