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Bitcoin Fundamentals vs. Fundamentals of Geopolitics – Analysts on Ukraine War

Some Ukraine supporters have gathered outside the Russian embassy in Bangkok to call for peace & an end to the war. Source: Twitter/@MayWongCNA

It’s the second day of Russia’s invasion of Ukraine, with the former moving undeterred by the sanctions imposed by certain Western countries. Among a great number of possible effects that the war could have or may have already had globally, the effect on the crypto industry is being discussed as well.

On Friday, the majority of the crypto market has recovered over the past 24 hours, since the overall redness observed yesterday – even if still largely red over the week. Bitcoin (BTC) is trading around USD 39,000, while ethereum (ETH) is testing the USD 2,700 level again.

According to the Trading Team at the crypto exchange Bitfinex,

“Markets across the board are dancing to the tune of geopolitical events.”

In a comment for, they argued that bitcoin is performing “in lockstep” with other “risk assets” as Russia’s invasion of Ukraine “sends global financial markets into a tailspin.”

Nonetheless, the team emphasizes that there is still “tremendous development and innovation across the digital token economy,” despite the current events in Europe, with long-term sustainable projects laying solid foundations for future growth.

Anto Paroian, Chief Operating Officer at digital asset investment fund ARK36, also argued that, for a couple of weeks already, the main driver of price moves “in the broader risk asset spectrum” has been the prospect of geopolitical escalation – and now that the war did happen, investors rushed “to take risk off the table.”

Not everybody agrees with some of the above-shared opinions, however.

Mati Greenspan, the founder and CEO of Quantum Economics, told that geopolitical affairs haven’t had much of an impact on financial markets, and “certainly not on bitcoin.”

The CEO went on to say that the number one crypto has “almost never been affected significantly by a geopolitical event before,” with rare exceptions occurring while the market was underdeveloped. But overall, he opined,

“Bitcoin tends to trade on its fundamentals and not on the fundamentals of geopolitics.”

In his latest newsletter, Greenspan reiterates his opinion that bitcoin is not falling due to the war in Ukraine and asks: “What kind of HODLer would be enticed to part with their bitcoin due to geopolitical uncertainty?”

As for what is influencing the price, the CEO writes:

“Bottom line, bitcoin and the stock markets continue to move down due to [US] Federal Reserve policy tightening. Headlines and the mere shock of what’s happening in Eastern Europe may have exacerbated the moves, but they are probably not the root cause.”

As reported, there has been a lot of discussions lately over what economic policies the European Central Bank (ECB) and the Federal Reserve plan to announce in March, and whether the latter will go forward with rate hikes – and if so, how many during this year alone.

So where could BTC go from here?

As all this was being discussed, analysts and traders across the crypto market and beyond have been keeping a close eye on the crypto price movements.

While the market is up today, Ruud Feltkamp, CEO of crypto trading bot Cryptohopper, said in a comment yesterday that he was “very curious how the Bitcoin price would react” to the developments in Ukraine.

Feltkamp’s conclusion is that,

“I honestly think it’s doing pretty ok. Regardless of the war, I expected a slight move down anyway, after which another [USD 40,000] retest is expected. Whether this will still happen is, of course, the question.”

Going back to the above-mentioned correlations, Dr Amber Ghaddar, co-founder of chain-agnostic protocol AllianceBlock, opined that BTC and crypto, in general, have been showing high correlation and high beta to risk-on assets for the past year, adding:

“In the current risk off environment, BTC and crypto have a negative outlook except for positive idiosyncratic events that could sustain prices. An increase in Russian military action will keep putting downside pressure on prices.”

As for what it is that the market should look for, Ghaddar noted that moves in the American Nasdaq stock exchange have been “a bellwether” for moves in crypto for a year now, stating: “The downside beta for crypto to the Nasdaq is quite high as we have again seen [yesterday] morning with Nasdaq down 2.6% in pre-market and BTC down circa 6.4% since the US close.”

Ghaddar made this comment yesterday during the price drops. Since then, besides the renewed greenery in the crypto markets, there has been a sharp turnaround in the traditional markets as well before they closed yesterday, with the Nasdaq Composite Index showing a rise of 3.44%.

Per Mati Greenspan, since the beginning of 2021, bitcoin has been moving in “a very wide range,” between some USD 29,000 and USD 69,000, while now it is “pretty low on that range.” The support now is building around USD 32,000, he says, but adds that he wouldn’t be surprised if it breaks that for a bit.

That said, Greenspan noted,

“But this is the broad range. The way to play a range usually is buy low and sell high. And if you’re looking at the chart of anything more than the last few hours, you should be able to see that we’re rather low. We’re well below our 200-day moving average at this point.”

Yet, these things are never certain, and the price could theoretically go down as far as 20,000, he notes – emphasizing that the drop would not be related to the situation in Ukraine in his opinion, but to the things that are “more connected right now with the liquidity in the market and the amount of dollars that are being printed, interest rates rising in the United States,” adding:

“Those types of things are our liquidity zappers.”

Veteran trader and technical analyst Peter Brandt suggests that we have to see the price’s next move in order to start speculating where it could go from there.

“We need a wash out on big volume in BTC to purge the last of the laser eyes. I am thinking sub [USD] 27,000 then I will take a look. We could bounce from [USD] 30,000 first, we will see,” Brandt told

NFTs and stablecoins in the face of volatile geopolitics

Meanwhile, Amber Ghaddar discussed the most and the least vulnerable crypto market segments. Other than stablecoins, she said, the least vulnerable should be non-fungible tokens (NFTs).

As most NFT investors are not traders but collectors we can expect two things, she said:

either their crypto price will increase to edge closer to the previous dollar value – especially for blue-chip names,or the floor will remain stable, creating opportunities for those still holding stablecoins.

Furthermore, Ghadder argues that it would be interesting to keep an eye on

algorithmic stablecoins to see if they keep their peg,and on the performance of other layer 1 to Ethereum (ETH), which could be an indicator of a loss of market dominance, particularly Solana (SOL), Cosmos (ATOM), Terra (LUNA), Avalanche (AVAX), etc).

In previous downturns, BTC was less volatile than other layer 1s, “while layer 2 with their high beta to layer 1 would take the grunt of the downside move,” she said. Layer 1 refers to the base protocol, or the blockchain itself, while layer 2 refers to any protocol built on top of that blockchain.

What if Russia adopts BTC?

Meanwhile, there has been some discussion recently of Russia potentially turning towards crypto, and specifically BTC, in the face of tightening sanctions. How likely is this is up to debate, but what is for sure, in Greenspan’s opinion, is that “we can’t stop Russia from using bitcoin.”

Should they choose to use it, even adopt it in the same or similar way El Salvador did – it would “certainly change things from bitcoin’s perspective.” This would not necessarily be a positive development for the currency.

People who hodl BTC and who are part of the Bitcoin network, understand that it is a mechanism for freedom, Greenspan said. So while Bitcoin would remain free, Russia using BTC would make it “more difficult to accept” in, for example, the US and its financial institutions, which would subsequently be forced to do “a lot more checks before they accept a Bitcoin transaction” that comes from Russia.

“That could add a lot of red tape to it,” he said, noting that, at the same time, the adoption by this large country would “certainly increase the usage of bitcoin.”

There is also the factor of Bitcoin miners in this equation. The US, and certain states, in particular, have welcomed Bitcoin and crypto miners fleeing the ban in China. “Certainly, if Russia is considering adopting bitcoin seriously, or if they’re forced to, then they’re going to want to also increase their hashrate,” Greenspan noted.

Other players are likely to be focused on that, as governments are not necessarily particularly concerned with who controls the hashrate – but there’s a financial incentive to control it, he said.

Also, according to him, there’s a financial incentive for everybody for Bitcoin to remain decentralized because as soon as one centralized authority has too much power within the network.

In his latest newsletter, Greenspan also discusses, among other things, Ukrainians fleeing the country following the invasion. He notes that:

“Those fleeing, however, may find it difficult to acquire resources, with massive lines forming at gas stations and martial law imposed on local banks. At the moment, ATMs are up and running, but there is a cash withdrawal limit of 100,000 Ukrainian hryvnas per day (approximately [USD] 3,350 at current levels). As we know, bitcoin fixes this.”


Learn more:
Bitcoin Shows Surprising Resilience Amid Russia Aggression-Provoked Selloff
Western Allies Claim their Targetted Russian Sanctions Trump a SWIFT Ban as Russian Occupiers Near Kyiv

With War Starting and Markets Dropping, Questions Multiply About Central Banks’ Policies
Bitcoin, the Ukraine Crisis and the Central Bankers Dilemma

EU Unlikely to Push for Russia to Be Removed from SWIFT – Diplomats
Ukraine Invasion: What the West Needs to Do Now

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