This is surprising because with cryptocurrency and
crypto exchange platforms, like
CoinSwitch, becoming a more mainstream part of the global financial system, as they have done in recent years, their vulnerability to the effects of international conflict increases.
Crypto prices rally: The facts and the context
When Russian President Vladimir Putin announced a “military operation” in Ukraine, the crypto market plummeted by around 10%. But as always it recovered, and in no time indeed. The crypto market hit a new record, and they are now worth more than $3 trillion.
Bitcoin, which was down by 8%, has now risen by over 15% in the last seven days. According to crypto data company Kaiko, after the conflict began, transactions on centralized Bitcoin exchanges in the Russian Ruble and the Ukrainian Hryvnia have risen to the highest in months.
The Russia–Ukraine conflict has made cryptocurrencies an unlikely weapon, and both countries are leveraging it to their own ends—for better or for worse. While Ukraine is receiving donations from across the globe from the crypto community, the Russian Ruble is seeking refuge in crypto assets. Various countries—the United States, European Union, Australia and Japan, among others—have issued heavy sanctions in response to Russia’s invasion. This has put a lot of pressure on the Russian fiat currency, making it possible for cryptos to rally.
Reasons for the rally
It’s quite normal for cryptocurrencies to fluctuate, but this time things are different. Despite the ongoing global crisis, the market is stronger than ever. The notion that digital currencies are safe assets is going very strong. Some reasons for this are external to the conflict, while others are not.
External factors driving the rally
With a third world war potentially looming over us, it is a scary time right now. Crypto traders have resorted to panic selling even in situations that are not so grave as the current one. So it is a curious fact indeed that they have not done so yet.
The fact that we are probably not seeing panic-selling is probably in part due to many HODLers staying true to the acronym
HODL, which stands for “Hold On for Dear Life”. HODLers are cryptocurrency investors who buy and hold their assets regardless of market fluctuations. HODLing is considered one of the most effective crypto investment strategies. So what we mean is, in the current context, despite everything, HODLers are HODLing on.
The world is getting a taste of the possibilities of
cryptocurrencies and their underlying blockchain technologies. In 2021 the crypto industry achieved so many milestones, and the growth and capital gains of Non-Fungible Tokens (NFTs) took the entire world by storm.
Bitcoin and Ethereum, the world’s most popular cryptocurrencies, both hit an all-time high. In 2022, blockchain technologies are conquering lands, and Decentralized Finance (DeFi) will play a significant role.
Do Your Own Research (DYOR) is a common phrase in the crypto space. As crypto becomes more mainstream, people are learning to DYOR more to understand the hows, whys, whats and whens of buying crypto assets.
There is already a multitude of information on the internet regarding investment strategies—all the dos and don’ts, which coin and tokens to invest in, when to HODL, when to sell, etc. DYOR helps investors filter out this information and reduce misinformation.
ET Spotlight SpecialConflict-related reasons driving the rally
The Ukrainian government appealed to the crypto community to donate to the country on 26 February 2022. Accepting donations in crypto is new for the country, and for most of the world, but it seems to be paying off really well.
So far, over 1,02,000 crypto donations totalling $54.7 million had been accumulated. And Gavin Wood, the founder of Polkadot, alone has made a donation of $5.8 million to the cause.
- Impact on traditional banking
It is difficult to rely on traditional banks in times like this because the governments themselves are also in chaos. That’s the reason the world found a way to help the warring countries through crypto.
Crypto is coming to the rescue of both the Ukrainian and Russian governments. Whether this is a good or bad thing, only time will tell. But at the moment, when both the countries need a system where no government is involved and is relatively anonymous, crypto is saving the day.
Conclusion
The Russia–Ukraine conflict is being viewed by many cryptocurrency enthusiasts as a game-changer that might change the
future of cryptocurrency. Putting naysayers who keep calling cryptos “just a bubble” to shame, cryptocurrencies are addressing the flaws and shortcomings of the traditional financial system. They have served both as a store of value and a means of conducting fast digital transactions.
Whether this might change the narrative of how governments around the world view crypto assets are yet to be seen. But some—including the Indian government—have already begun to warm up to them and the future of
cryptocurrency in India looks promising.
As an investor in India, if you are beginning to do so too, start by building your crypto portfolio on CoinSwitch.
Disclaimer
: The above content is non-editorial, and TIL hereby disclaims any and all warranties, expressed or implied, relating to the same. TIL does not guarantee, vouch for or necessarily endorse any of the above content, nor is it responsible for them in any manner whatsoever. The article does not constitute investment advice. Please take all steps necessary to ascertain that any information and content provided is correct, updated and verified.
Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.
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