Through the Sands of Time
In 2024, the historical conflict has unfolded in two distinct phases: the first occurred from April 1 to April 19, and the second has been ongoing since July 31. During the first phase, as stated by Forbes, a business magazine, Bitcoin’s (BTC) price plunged from $70,000 to $60,000. Furthermore, the magazine reported that the downfall in BTC’s price impacted other crypto coins such as Ethereum (ETH), Solana (SOL), Ripple (XRP), Binance Coin (BNB), Dogecoin (DOGE), among others, removing $500 billion from the overall crypto sector. As recently as October 1 saw things take a turn when Iran dropped around 180 missiles on Israel, in response to the latter’s killing of militant group Hezbollah’s former secretary-general, Hassan Nasrallah, and a couple of other officials, according to reports.
Historically, geopolitical events have had a profound impact on global markets, and the crypto space is no exception. Previously, an article published by ScienceDirect, a database for journal articles, stated that the Russia-Ukraine war impacted BTC exchange returns. Specifically, it resulted in a 0.2% decline in the crypto’s trading volume, based on a panel analysis comprising 20 countries from January 23 to April 16, 2022. On the other hand, Ukraine passed a law legalising crypto assets, as a way to receive donations for funding their battle against Russia.
As Things Stand
October’s start saw the crypto market facing a 3.29% fall in overall market cap value. Post Iran’s missile strike on Israel, BTC’s price dropped to $60,200, marking a 6% plunge from its recent peak of approximately $64,000. Apart from BTC, ETH and SOL also sustained losses worth more than 4% and 5%, respectively. Coinglass, a crypto derivative data analysis platform, found that the situation caused widespread sell-offs worth $523.37 million, within 24 hours. However, the most pressing question is understood to be around the long-term implications of the conflict on the crypto market. From an investor’s perspective, there are two sides to the story, them being:
Bull Run Potential: If the conflict escalates and investors continue to look for safe havens, BTC and other crypto assets could enter a prolonged bull run. Increasing adoption in regions directly impacted by the conflict, combined with rising global demand for crypto assets, could push prices higher. Additionally, as traditional financial systems face pressure, the appeal of borderless financial systems like crypto will likely grow.
Risk of a Correction: Conversely, extended conflict and potential energy disruptions could impact. Rising energy costs could slow the mining process, and global economic instability might trigger sell-offs. If the war expands again, the financial fallout may affect the purchasing power of retail investors, leading to lower trading volumes.
