Although the digital market does not seem to be affected by the external agents that usually affect the traditional economy using Bitcoin, the War in Ukraine proved the opposite.
Cryptocurrencies in the Context of War
Although during so much pain, because of so many wounds left by War, it seems illogical that the issue of the digital economy would have a surprising impact in terms of managing a country’s finances from the context of War.
In recent years, Bitcoin and cryptocurrencies‘ positioning has been positive without even expecting it.
Many people have taken crypto investments as a way of life; on the other hand, some countries have adopted them to escape from inflation and as an alternative means to move their countries forward.
We never imagined that this type of digital financial instrument could serve as a lifeline in a limited economic situation with traditional currencies (Fiat) in the warlike situation that Ukraine is going through.
For some time now, it has been heard that the issue of cryptocurrencies in a war situation would be beneficial; consequently, their form of use is digital. They also do not depend on any entity to carry out transactions with them.
Given the blockades that will arise due to Russia’s invasion of Ukraine, the economy of the Russian entity will be affected since most of its operations will be blocked.
It will promote the use of cryptocurrencies as an alternative way to make international payments from Russia to the world and vice versa.
Investments in both countries are incredibly complex, but as cryptocurrencies are decentralized and are not controlled by any external agent, this could be an excellent opportunity for cryptocurrencies to position themselves even more.
Although it may be the solution for these countries in conflict, it is also curious that Bitcoin has dropped in value since the moment the dispute arose, something that makes us wonder if it is how this market disapproves of the fact of War.
What is the reason for the fall of cryptocurrencies in the War?
The world has just had a challenging situation regarding the COVID-19 pandemic; some factors influenced the economy, leaving devastating results for many companies and individuals.
A host of factors support the fact that the traditional economy was affected; many of them also meant that, in some way, the refuge from this crisis was nothing more and nothing less than Bitcoin and cryptocurrencies.
Economies are always in constant change; it cannot be controlled, but it is a matter of manipulating the market so that it adapts to the diverse needs of the environment, and thus the pieces of a fractured economy come together.
However, the volatility of the digital market allowed many of its digital assets during the pandemic to exceed their market capitalizations, driving the price of these digital currencies to levels never expected.
Many people have become wealthy due to the crises of the traditional economy. As a result, they have taken cryptocurrencies as a form of investment where their savings are safe despite the volatility of this new and exciting market.
It turns out that the old continent, in the face of this war situation, is again in a state of alarm, where this time it is energy distribution that is affected, which is why blockades arise as a measure of pressure so that the conflict ceases.
What is contradictory for the countries involved is that if blockades are issued as a measure to limit actions and make the Russian State feel obliged to lay down its arms, cryptocurrencies, because they are not regulated, serve as a means of escape from these measures.
Two essential aspects can impact the decrease in the price of Bitcoin and other cryptocurrencies. One is the fear of many to invest in this digital currency that even though it has positioned itself, it is still a challenge to invest in them.
It is due to the lack of support they have. Due to its nature as a digital marketer, it is still under evaluation. Many investors and individuals fear leaving their capital in a volatile digital currency.
On the other hand, the fact that cryptocurrencies serve as a way to evade blockade measures is unacceptable for many since a war only brings disastrous results for the countries involved and, therefore, for the rest of the world.
Conclusion
The situation is complex where the impact of War is psychological, physical, geographical, and economic, but it also has an intangible influence on all social spheres of a nation.
Cryptocurrencies did not emerge just a few months ago and were intended to adopt as a refuge now that these two countries are beginning a war; it is vital to analyze if there is a positive point in which cryptocurrencies can help solve this difficult situation; it is coherent to support them.