Recently, Russia officially declared war on Ukraine. As a result, for a time, all financial markets, commodity markets, precious metal markets in the world, including the cryptocurrency market, have been incredibly shaken.
This incident has naturally become a hot spot that many media are chasing for the first time. Almost all financial and political media are interpreting the situation of this geopolitical crisis and predicting the subsequent development.
Many media have paid attention to two news: Ukraine and Russia have legalized cryptocurrencies respectively.
Leaving aside the reasons for the legalization of the two countries, one point is worth our attention. Once cryptocurrencies are legalized and circulated in countries such as Ukraine and Russia in the subsequent development, it will significantly strengthen the status and popularity of cryptocurrencies.
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So for us in the cryptocurrency industry, how do we view this kind of event?
In fact, it is more inclined to interpret such events from the possible impact of the development of the event on the subsequent market and trend of cryptocurrencies. The triggering of such geopolitical events is often explosive, but its impact is very likely to be subtle and far-reaching.
First of all, the instant outbreak of this event made us see the apparent properties of various assets again: the jump in gold and silver once again demonstrated their safe-haven properties that have been solidified for thousands of years; the simultaneous plunge in the stock market and cryptocurrency showed that Obvious risk assets attributes; oil surged all the way or even more than 100 US dollars, showing the market’s concerns about the energy crisis.
The performance of the cryptocurrency this time has defined its short- and medium-term properties quite clearly: in the short and medium-term, they are defined as risk assets.
Secondly, if we analyze further, we will think that the outbreak of the war is only the beginning, and then Russia will face a series of sanctions. These sanctions will continue to increase the turmoil in the market, which will continue to push up the oil price, which will push up the already high inflation. This inevitably makes the Fed’s rate hike in March inevitable, putting pressure on U.S. stocks and the cryptocurrency market.
Recently, the U.S. stock market has undergone a dramatic reversal: first, at the opening of the market, U.S. stocks plummeted due to the impact of the war; but after the U.S. President issued a statement of condemnation and sanctions, the market interpreted this statement as the next step of the U.S. government. The severity of the measures to be taken will be far lower than Wall Street’s expectations so that U.S. stocks have fully recovered lost ground and even ushered in a good rally.
In our opinion, this is probably not a good sign. This reflects the extreme unease that the market is in right now. This is very similar to the early days of the bear market when everyone still has residual confidence in the market, but any glimmer of hope is like grabbing a life-saving straw.
But judging from the current general environment, we can confidently say that unless the Fed does not raise interest rates, the market’s next trend will be very pessimistic. I don’t think each rate hike by the Fed is big or small; it won’t change the market’s continued deteriorating trend.
It may be because of the current downturn in the market or because the news of Russia sending troops to Ukraine has quickly become the focus of overseas media attention, the importance of encryption legalization does not seem to be mentioned and discussed.
This war lasted for a short time, from the beginning to the end. It seems that the crisis on the surface has passed, but the actual market fluctuations and chain reactions may have just begun.