During the course of the early morning trading sessions on Thursday (EST), 24-hour statistics show the crypto economy dropped more than 11% in value against the U.S. dollar. While the leading crypto asset bitcoin shed close to 10%, a myriad of alternative digital assets lost close to 20% in value. The crypto market downturn is being blamed on Russia invading Ukraine’s borders as Russian president Vladimir Putin’s troops entered the country before dawn on February 24. The digital currency community has been discussing the situation and many crypto advocates have different opinions about the current geopolitical risk and its future effects on the crypto economy.
Russian Troops Invade Ukraine, Crypto-Economy Loses 11% Overnight, Bitcoin Advocates Discuss Geopolitical Risk
Following the report Bitcoin.com News published on Wednesday evening (EST), media reports disclosed that Russian troops have invaded Ukraine and acts of war have been committed. While the scope of the attack is uncertain, reports indicate that cruise missiles have been fired and there have been a few explosions adjacent to Kyiv’s international airport.
As our newsdesk’s report noted yesterday, the geopolitical tension has caused stock markets and cryptocurrencies to fall significantly in value. At the time of writing, the entire crypto-economy has lost 11.1%, and just before Thursday’s opening bell, futures indicate that Wall Street stocks are in for a volatile day of trading.
What happens with bitcoin and crypto during war. Guess we will find out. Yay history.
— DaBean (@HoneyBadger10) February 24, 2022
Meanwhile, cryptocurrency advocates are talking about the Russia and Ukraine situation in great detail and discussing theories about the future of crypto markets amid the escalated conflict.
For instance, the “reformed hedge-fund manager” and bitcoin proponent James Lavish told his 18,000 Twitter followers: “If you’re selling bitcoin here because of fears of war and civil unrest, you have absolutely no idea what you own and why it is so vitally important for the world at this very moment.”
FTX CEO Samuel Bankman-Fried also discussed the situation in Ukraine and he stressed that war is “really bad for the world.” Bankman-Fried further noted that Eastern European financial systems and currencies were feeling the wrath of the storm.
“It makes sense that stocks are down,” the FTX CEO said. “War is, generally, bad. What should BTC be doing here? — If the world gets sh***ier, people have less free cash. Basically, selling BTC — along with stocks, etc. — to pay for war.”
The FTX executive added:
On the other hand, this is likely destabilizing for Eastern European currencies. And, more generally, for Eastern European financial systems. Which means they might be looking to alternatives. If you were in Ukraine right now, where would you trust your money?
Many crypto supporters continued to highlight that despite the market carnage, censorship-resistant cryptocurrencies are very important during times like these.
“There’s a war going on outside,” an individual wrote on Twitter. “Tempted to say ‘crypto doesn’t matter today.’ But that’s BS. As long as the world is fueled by the traditional money printing machine the forever wars continue. Bitcoin adoption [and] blockchain tech will separate the nation-states from banks.”
💥BREAKING: USA to limit Russian trade and business in USD 🤔
— Bitcoin Archive 🗄🚀🌔 (@BTC_Archive) February 24, 2022
“It’s not World War III, it’s the best time to jump into bitcoin,” another individual tweeted. Microstrategy’s CEO Michael Saylor replaced the old “give peace a chance” adage with the word bitcoin and said: “Give bitcoin a chance.”
Peter Schiff and Others Expect the Fed to Change Its Tune
Of course, the gold bug and economist Peter Schiff threw in his two cents about the Russian invasion, the Fed, gold, and bitcoin.
“Perhaps, the Fed is relieved that Russia invaded Ukraine as now it has an excuse not to raise interest rates in March,” Schiff tweeted. “If it wasn’t this it would’ve been something else, but as far as excuses go this one’s hard to top. Gold spiked 1.5% and bitcoin dumped 5.5% on the news.” Schiff wholeheartedly believes that sanctions on Russia could end up making inflation jump even higher for Americans. Other observers agree with Schiff and think that the Fed will not accept fiscal responsibility after the Russian invasion.
One crypto advocate on social media insisted:
Inflation gets worse during war, not better. My prediction is that any attempts at fiscal responsibility by the Fed will go out the window. #Bitcoin.
The conversation concerning the Federal Reserve is tied to the predicted rate hike slated for March. While the Federal Open Market Committee (FOMC) told the press it would raise the benchmark interest rate “soon,” Fed chair Jerome Powell remarked to the press that it would likely happen during the March FOMC meeting.
Fiat is war. #Bitcoin is peace pic.twitter.com/wDKGn1XEI9
— Belief_BTC⚡️⚡️⚡️🅱 🧡(🍊,💊)(🌋,🏴☠️) LNP/BP⚡️RGB (@Belief_BTC) February 24, 2022
If the U.S. central bank does increase the bank rate, equity and cryptocurrency markets could see more sell-offs. Although, as mentioned by Schiff and many others, the crisis in Ukraine may stop the Fed from raising the bank rate and pause the tapering of large-scale monetary purchases as well.
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