• Nervousness on the stock markets also affects crypto investors
• Bitcoin in the field of geopolitics
• Relevance of BTC in the Ukraine conflict is increasing
Stock markets are sensitive to any news from eastern Ukraine. The fluctuations on the stock exchanges worldwide are strong in view of the uncertain situation: While signs of an easing in the conflict between Russia and Ukraine encourage investors and allow the stock exchanges to rise, reports of an impending escalation of the situation repeatedly cause setbacks on the stock exchange floor.
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In a tense and uncertain environment, crypto fans consider cryptocurrencies – and Bitcoin in particular – to be an alternative investment that investors can use to limit their portfolio risks. But the crypto market has been reacting in line with the stock markets for some time now, and anyone looking for security in the geopolitically tense situation is unlikely to find it in Bitcoin at the moment. Since the start of the year, the crypto veteran has lost double-digits in value, and over a three-month period Bitcoin is currently even a third cheaper. If you take the highs from November as a basis, the price discount is even larger.
Experts target Bitcoin future
Yuya Hasegawa, crypto market analyst at the Japanese bitcoin exchange Bitbank, currently sees the bitcoin as being caught between geopolitical events. “Bitcoin is referred to by some as a stateless currency and has actually performed well during geopolitical tensions in the past, so we could expect some demand as a safe haven,” CNBC quoted the expert as saying. However, the change in landscape has made Bitcoin vulnerable to US stock market volatility, Hasegawa said. In his view, only a relaxation on the Russian-Ukrainian border would also calm Bitcoin investors down again.
Chris King, CEO and founder of Eaglebook Advisors, meanwhile, doesn’t believe Bitcoin’s weakness will end anytime soon. “If we are in a bear market, we will see sideways to downside for another eight or nine months, which is an opportunity for the crypto tourists to exit the market and for the real players to keep developing this technology.” , CNBC echoes the expert.
Although there is a new interest in decentralized finance, it is still too early to take off and the concept is too underdeveloped. In the long run he is long in DeFi, but this investment is speculative since the infrastructure is still under construction and it is clunky and difficult to use. “Bitcoin was also tough to buy in 2013-2016, but companies like Coinbase and Gemini have made it easier. DeFi needs that ramp to improve and become less speculative. It just takes time,” King continued. Bitcoin itself hasn’t yet found its killer app – that is, the feature that makes it indispensable, but increasing adoption will get the coin there. Bitcoin adoption is the point that matters.
Bitcoin plays bigger role in Ukraine conflict
So while experts expect that the current uncertain political situation and the lack of adoption will probably continue to cause problems for Bitcoin, cryptocurrencies have played a major role in the current geopolitical conflict.
Amid tensions with Russia, Ukraine has legalized cryptocurrencies. Deputy Prime Minister of Ukraine Mykhailo Fedorovon has announced in a Twitter post that the Ukrainian Parliament has passed a law on virtual assets that will legalize cryptocurrencies. According to the politician, this step is also intended to protect Ukrainians’ assets from possible misuse or fraud.
Ukraine is already in top-5 countries on cryptocurrency usage. Today we made one more step forward: Parliament adopted law on virtual assets! This will legalize crypto exchangers and cryptocurrencies, and Ukrainians could protect their assets from possible abuse or fraud.
– Mykhailo Fedorov (@FedorovMykhailo) February 17, 2022
This decision could also be related to an impending escalation in the dispute with Russia, as cryptocurrencies are playing an increasingly important role in this conflict. As “Wired” reports, crypto donations to the Ukrainian military have recently risen sharply. According to the portal, pro-Ukrainian hacktivists are also increasingly financing their digital resistance with cryptocurrencies. In the second half of 2021, digital donations increased to $550,000 from $6,000 in 2020, according to Elliptic, a blockchain analytics company.
Bitcoin remains in tension
The Ukraine crisis is putting bitcoin in the area of conflict between geopolitical uncertainty and increasing relevance in the conflict in eastern Ukraine. What will reflect more on the bitcoin price remains to be seen. Investors currently seem to be acting cautiously and are therefore tending to avoid traditional risk assets such as Bitcoin.
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