A World War could trigger ‘an immense spike’ in Bitcoin price, adoption, Covalent CEO says

Bitcoin and cryptocurrencies have been featured on both sides of the conflict since war broke out in Eastern Europe.

For Ukraine, at the start of the war, government officials called on the cryptocurrency community: donate fundsAt the same time, Russia has made a U-turn on its previous crypto ban plans and opted for a more comprehensive approach, including developing a legal framework.

according to FTBridgewater Hedge Fund said all this shows that war is a catalyst for the growth of digital assets.

“These short-term dynamics are occurring alongside structural changes in the cryptocurrency market that we believe are self-reinforcing as adoption by major institutional investors increases and the ecosystem around them deepens. .”

NATO Secretary General Jens Stoltenberg He warned that the war between Russia and Ukraine could last for years. Six months into the outbreak, he said, stances between NATO and Russia have signaled a possible heightened threat of world war, not forgetting rising tensions between the United States and China over Taiwan.

We therefore consider the role of cryptocurrencies under such a scenario and whether World War III could spur increased adoption and use.

Coalition Attacks Russia and China

June 20, Russian officials requested Lithuania lifts rail restrictions to Kaliningrad. The Russian enclave is located east of Moscow between Lithuania and Poland and receives supplies from Russia by a rail route through Lithuania.

NATO member Lithuania had banned the movement of goods between Russia and Kaliningrad due to the enforcement of EU sanctions. Russia’s foreign ministry said Russia has the “right to act in defense of its national interests”.

Article 5 CITES said an attack on NATO member states would be an attack on all member states and could result in “collective defensive measures” against the attackers.

Fortunately, it’s been over a month and the incident hasn’t escalated. Nonetheless, its flashpoint indicated the potential for tension to erupt into something bigger.

Similarly, tensions between the US and China are rising even further Was nervous “Those who play with fire will perish with fire,” said President Xi Jinping ahead of the phone call between President Xi Jinping and President Biden, according to China’s foreign ministry.

Despite the warning Pelosi Meeting with members of the Legislative Yuan of Taiwan and the chairman of Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC), Mark Liu.

Pelosi, who commented on China’s “aggression” ahead of the visit, said her defiance of Beijing should be seen as a declaration of US support for Taiwan.

“In the face of accelerating attacks by the Chinese Communist Party (CCP), our congressional delegation’s visit is a clear statement that the United States will stand by our democratic partner, Taiwan, to defend itself and its freedoms. should be viewed as a valid statement.”

China responded by imposing sanctions on Taiwan, suspending exports of certain food items and natural sand. As well as launching live military exercises around Taiwan, he has several exercises less than 10 miles from Taiwan’s coastline.

Crypto can replace traditional finance in tough times

It is unknown what will happen to cryptocurrencies in the event of a world war, as there is no framework to refer to.

At the national level, demand for digital assets has proven to tend to surge during difficult times. An example of this is Venezuela’s hyperinflation, which surged demand and price premiums for Bitcoin. At one point, Venezuelans were paying an average of $1,980 (about 20% at the time) more than the spot price.

according to Institute for Strategic and International Studies (CSIS), Venezuelans turned to Bitcoin and other cryptocurrencies for several reasons, including wealth preservation, censorship-resistant remittances, humanitarian aid, security against petty theft, and financial inclusion. .

But what happened in Venezuela is not the same as what could have happened during a world war that could have involved the destruction of global communications and energy infrastructure.

Bitcoin Demand Likely to Act as a Tailwind for Prices

CEO of Blockchain Analytics Platform, by email Covalent bond, Ganesh Swami shared his belief that if a world war were to occur, several factors would likely converge to cause a “huge spike” in Bitcoin price and adoption.

In turn, this effect is expected to lift the rest of the cryptocurrency market as well, as investors cycle between tokens to maximize profits.

Swami said a world war could lead to mass migration as people flee to safer countries. You may rely on coins, but not cash or precious metals.

“Unlike banknotes and gold, which can be easily found, stolen, or confiscated, a seed phrase is all you need to keep Bitcoins secret. prize.”

Similarly, another factor in the mix could be loss of energy security. In this situation, miners struggle to keep their machines running and to generate income. Swami said this could “plate out existing supply”, leading to shortages and acting as a tailwind for bitcoin’s price to rise.

For now, the world is waiting in anticipation of what will happen next.