Gate.io Blog:The Conflict Between Russia and Ukraine Continues, How to Interpret Cryptocurrency as a Significant Financial Instrument？

【TL; DR】

1. In the context of the conflict between Russia and Ukraine, cryptocurrency shows the duality of risk and hedge.

2. In terms of positioning, people's understanding of Bitcoin has gradually changed from "world currency" to "electronic gold". Bitcoin is indeed considered an anti-inflation hedge asset to some extent.

3. The price of Bitcoin fluctuates greatly and is easy to rise and fall sharply, which makes Bitcoin more speculative and closer to risky assets in the short term.

4. The Russian-Ukrainian war is also the first crypto war in human history. Virtual assets such as Bitcoin were fought by both sides of the conflict in this war.

5. The surge in encrypted donations to NGOs and volunteer groups in Ukraine has played a role in easing the pressure on Ukraine's domestic economy.

6. Cryptocurrency may be able to partially carry Russia's domestic payment needs and help Russia mitigate the impact of Western sanctions.

The second black swan incident in 2022 is the deteriorating and evolving conflict between Russia and Ukraine. Meanwhile, this incident will also provide us with a place to observe, help us correctly understand the encryption assets including Bitcoin, and analyze where the crypto market in the war will go.

Risky Assets or Hedging Assets

There are still many disputes about whether Bitcoin is a speculative asset or a hedge asset. In the context of the conflict between Russia and Ukraine, cryptocurrency shows the duality of risk and hedge. Since the price reached an all-time high of $69000 in November last year, the price of Bitcoin has been falling all the way. Especially after entering February 2022, under the influence of adverse news such as the approaching interest rate hike cycle of the Federal Reserve and the tense relationship between Russia and Ukraine, the price of Bitcoin fell below US $37000 several times, while the price of gold, as a traditional hedge asset, rose all the way.

For more information on the specific analysis process, please read this blog:The Conflict Between Russia and Ukraine Continues, How to Interpret Cryptocurrency as a Significant Financial Instrument？

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Gate.io Team
March 4

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