Jason Simon explains how Russia’s invasion of Ukraine may impact cryptocurrency

Between the night of Monday, February 23, and the early morning of Tuesday, February 24, Russia deployed its troops and began attacks against Ukraine. This situation has generated worldwide geopolitical and economic consequences, including the fall of the stock market, in which cryptocurrencies were not left out of the bag. Jason Simon, an expert in volatile markets, explains how this war between the two countries affects cryptocurrencies.

In the case of Bitcoin (BTC), the world’s most powerful cryptocurrency, its price was affected in such a way that it suffered the sharpest drop in the last month, remaining at $34,337, thus decreasing by 8.5%. Meanwhile, Ethereum (ETH) was also impacted and fell by 12%, thus settling at $2,301. Other cryptocurrencies fell, as well.

In addition to the reaction from the financial and crypto markets, likewise, a number of prominent figures in the crypto community spoke out in the face of the Russian invasion of Ukraine. “Fu** War,” wrote Barry Silbert, CEO of Digital Currency Group, the largest digital asset management firm in the US.

For his part, Simon has indicated that “the fall of cryptocurrencies because of the Russia-Ukraine war, proves that they are assets of large variations, risky investments, largely because of their greater integration with global financial markets, which makes them move like other risky assets.”

Before the opening of the stock markets, the S&P 500 index had concluded lower this Wednesday 23, while BTC maintained a strong coupling with traditional stocks. The performance of gold, which had been on the rise since February, contrasts with the performance of BTC, which has continued to decline in recent days. The reaction of BTC on the Ukraine-Russia conflict would not be in line with the narrative that proclaims the first cryptocurrency as digital gold.

At the same time, the precious metal, which recorded a decline in its appreciation of 6% in 2021, has responded in line with the expectations of investors, who seek in this a safe haven asset in the face of the uncertainty caused by the war conflict in Eastern Europe.

“Even with BTC’s close coupling to traditional assets, its performance for investors over the medium to long term has been far superior,” Simon points out. “Earlier this year, an analysis revealed that while the S&P 500 index had appreciated 30% by 2021, bitcoin achieved 63% appreciation, i.e., more than double that of conventional assets.”

On the other hand, in the case of ETH, experts suggest that the digital asset will not be able to break the $2,700 barrier and will be stuck for several weeks in that range. According to Simon, the war conflict between Ukraine and Russia is the main factor in the instability in the crypto market, which also transcends to other markets such as Wall Street.

But, to the surprise of many, BTC has a special role in the Ukrainian war: volunteer groups and separatists in Ukraine are funding themselves through cryptocurrencies such as BTC. Simon conducted research and found that “the war in Ukraine is being crowdfunded with cryptocurrencies.”

“Crypto funds are being used to equip the Ukrainian military and fund cyberattacks against Russia. Crypto donations to these groups increased by more than 900% in 2021,” Simon reported.

Meanwhile, as to what will happen in the coming days with the value of these assets, it is still improbable to make predictions, as it will depend on the development of the war, among other factors.