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Cryptocurrency reaction to the war in Ukraine

Vladlena Martus 2022-04-25

How did cryptocurrency react to the war in Ukraine?

Wisebitcoin did a brief review of what happened in the cryptocurrency market after the beginning of the war in Ukraine: 

  • The cryptocurrency market reaction;
  • If the attitude towards cryptocurrency has changed; 
  • Records and anti-records that are being set now;
  • Near future consequences.

Be careful; cryptocurrency is a risky asset that may not always bring the desired profit. Whether you are ready to trade cryptocurrency or invest in it depends only on you. 

We provide a particular layer of facts that will help you understand the topic of digital assets a little deeper and decide whether you should consider your participation in the cryptocurrency market.

Content:

  1. What happened?

  2. How did the cryptocurrency market react?

  3. Did the attitude towards cryptocurrency change?

  4. What is the first prognosis for Bitcoin, by the way?

  5. To sum up
     

What happened?

The 24th of February was a turning point for the whole world: Russian Armed Forces invaded the territory of Ukraine and announced the so-called “special military operation to protect Donbas,” which led to a major humanitarian catastrophe, the killing of warriors and civilians, the destruction of the military and civilian sectors, as well as powerful sanctions against Russia by the Western community. 

The invasion of Ukraine is already labeled as the most significant war in Europe in the 21st century.

How did the cryptocurrency market react?

As the sanction plans affected the Russian economy, and the destruction of infrastructure has led to most Ukrainians being cut off from traditional banking, how would crypto be more helpful?

Of course, with its first and most crucial purpose, cryptocurrency aims to allow people and institutions to transact without the need for fiat or other traditional financial assets. Thus, the Ukrainian government has actively gathered direct donations in crypto, with over $100 million received, for example, even without direct access to the banking sphere. These donations have been lauded as a good use case of crypto assets.

This time, when crypto is allowed to show its decentralized power, how, in general, can we describe its reaction to this crisis

The reaction of both world country leaders and world markets didn’t come too late. Cryptocurrency, to the point, showed the maximum fall since the summer of 2021. 

24 hours after the beginning of the Russian invasion, the cryptocurrency market has shrunk by more than $150 billion, according to the information on Coinmarketcap, the world’s most-referenced price-tracking website for crypto assets

On the 24th of February, by 15:00 Moscow time, Bitcoin started to fall sharply by 5.8% to $35,403. The first cryptocurrency fell by 8% the following day and reached a monthly low of $34,702. Its “younger brother” Ethereum, the second most popular cryptocurrency, has fallen by 8.7% to $2,393. A similar situation with the sharp drop is observed with the rates of Cardano, Solana, and XRP. 

Did the attitude towards cryptocurrency change?

These events led to doubts about cryptocurrency as a stable and secure financial instrument. Many users are not sure if cryptocurrency can be as independent as crypto enthusiasts consider it to be. Can global events affect both ordinary money and a decentralized digital currency? Let's look into this a little.

Although crypto enthusiasts claim zero dependence on geopolitics, it affects the cryptocurrency market. Global world events are mostly the cause of fluctuations in the cryptocurrency market. It works like the currency market because there is a common element – a trader who is just a person. And it is human nature to assess risks and be afraid of falling asset prices. 

The current depreciation of Bitcoin and other altcoins only proves the inseparable connection between digital assets and geopolitics. Thus, for example, usual statements by the US government or regular sanctions against a particular country can lead to both a record fall and a record growth in the digital assets market. It mostly depends on: 

  • User confidence in cryptocurrency;
  • The level of danger of the events taking place; 
  • The consequences for the banking sector; 
  • The announcements from the crypto community;
  • Security threats, etc.

However, the essential dependence is that the war in Ukraine has shown that cryptocurrency is also considered a massive weapon against the Russian invasion. 

Thus, at the start of the sanctions against Russia, the loudest statement was made by the world’s largest crypto exchange Binance. At first, the company’s representative claimed: “Limiting Russians’ access to crypto would doubt the reason why crypto exists.” However, after a couple of days, Binance CEO Changpeng Zhao struck a different claim, saying that the company applies the same sanctions as the banks. At the same time, Zhao says: “The company will follow the sanction rules, not our personal.” He also decided not to freeze all Russian users’ assets because Binance has no authority. The Western community should put sanctions against the government and billionaires from Russia, not against the usual citizens. 

Many other major cryptocurrency exchanges also were put in a precarious position after calls by Ukraine to block all the Russians’ accounts. At the same time, the numerous crypto exchanges only carried out the sanction plan aimed at devastating the Russian economy. Major exchanges have also clarified that they would comply with the United States and European sanctions, not further than the mandatory law. 

Collateral damages have always accompanied war, and cryptocurrency has played a massive role in allowing the civilians on both sides to continue accessing financial operations. Even if the cryptocurrency could be risky in times of war, it can help to continue living at a regular rate. So, high-risk elements will leave, and the goal to allow individuals or institutions to operate the finance will stay.

What is the first prognosis for Bitcoin, by the way?

Simultaneously, the Bitcoin rate right now could not be called critically low. Last summer, in June, it dropped to $28,800. However, if the fall continues, experts say that the most popular cryptocurrency will cost only $20,000 on the exchanges by the beginning of summer. The price of Bitcoin could continue to fall to $30,000 at first, which will be a curious case to research if it happens.

At the same time, analytics promise that Bitcoin will rise this year. If the cryptocurrency can stay and stick to the level of $30,000, then it is likely that Bitcoin could rise to new all-time highs – to $200,000 – at the end of this year. 

One of the most popular and experienced crypto traders, Nicholas Merten, claims that if Bitcoin manages to break the line of $100,000, it will be the enormous impetus for developing a bullish trend. It is pretty interesting to compare this prediction with the possibility that Bitcoin could cost less than $20,000 by this summer. Nice case to follow too. We’ll be watching over it!

To sum up

The cryptocurrency market has become a high-risk asset during this war; conversely, it also showed its power and help for innocent civilians from both sides. 

Even following the sanction plan, crypto leaders try to follow official laws and privacy, security, and users’ rights. It gives a great perspective to the cryptocurrency market as an excellent source of reliability and trust to keep your assets and use them for everyday life even in turbulent times. 

To sum up, Wisebitcoin tried to give you a short overview of the events. It is crucial to be attentive and responsible because difficult times always lead to losses and other unpleasant consequences. However, the cryptocurrency market again showed that it could be trusted, with the same bit of risk, of course, but at the same time being sure that your assets will be safe. 

Wisebitcoin joins crypto exchanges and trading platforms that have decided not to close the access to crypto assets for people from all over the world. We know how difficult it is to decide on something serious and responsible, especially related to money, so we offer the best conditions for cooperation and invite you to visit our pages here and here, to know more details about our platform.

Wisebitcoin always stands for the user and his rights. We believe that trust is built primarily on honesty and openness. Visit our website for more detailed information, and thanks for reading our short review!

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