Possible Scenarios For Bitcoin, How The Market Has Reacted To Past Wars

Reynaldo Marquez

1 year ago

3 mins read

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Bitcoin has been moving sideways around its current levels as the war started by Russia with Ukraine rages on. The first crypto by market cap could see more bloody days ahead, as uncertainty about the outcome, sanctions to the Russian government, and their impact across the market increases.

At the time of writing, Bitcoin was trading at $38,284 with 0.7% profit in the past 24-hours. However, it quickly managed to get above previous resistance and trades at $40,561 with a 7.66% profit on the daily chart.

In a recent report published by QCP Capital, the firm claims the Luna year of the Tiger has been marked by important negative events which took their toll on global markets. These include the Chernobyl Disasters, the Cuban Missile Crisis, the Korean War, and now the Russian invasion of Ukraine.

Due to the international sanctions on Russia, its equity, bonds, and currency have been heavily affected. This reaction, QCP Capital said, could contribute with a rapid de-escalation of the conflict.

Thus, buying the Bitcoin dip as it stumbles back into previous lows could be a profitable option for investors. QCP Capital reviewed the market reaction to previous conflicts in an attempt to assess a potential future reaction from the market. The report claims:

Historically, war-related sell-offs have been great buying opportunities, particularly large-scale war involving superpower. In the Vietnam war (1964) Gulf War (1991), Afghan War (2001), Iraq War (2003) and Crimean Crisis (2014), markets saw positive returns for 3-6 months after the invasion.

The firm believes the current situation has been following the pattern as Bitcoin and other assets seem to be bouncing back. This situation could sustain itself, at least for the short term, but QCP Capital recommends cautions as there are many potential global headwinds.

Daniele Casamassima, CEO at Pure Fintech told NewsBTC the following on the current situation:

This uncertainty in the crypto market is further hindered by the fact that there is now a close correlation between financial markets and global crypto markets.

Break Or Bounce, Why Bitcoin Could Follow Old War Patterns

A similar situation occurred in 2001 with the U.S. invasion of Afghanistan, the report said. At that time, the market bounce back for 3 months, and then returned to a downtrend that broke previous lows.

For Bitcoin, this scenario could lead it to revisit the low $30,000 or break below to last year’s low around $28,880. One key different with previous conflicts, as QCP Capital noted, is the imminent hike in interest rates from the U.S. Federal Reserve.

In 2021, interest rates were at 6.1% and today they seem to only trend to the upside which could negatively impact global markets. Others believe the opposite, if the conflict extends, the FED and other central banks could used it as an excuse to delay any shift in monetary policy.

Related Reading | TA: Why Bitcoin Must Close Above $40K For Trend Reversal

Casamassima added the following on a potential bullish thesis for Bitcoin:

The digital currencies, although badly affected at the moment, in the long run could become the only feasible option for those people that are the most affected by new economic sanctions. Therefore the bear market could turn into a bull market.

Reynaldo Marquez

A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.

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