As the conflict between Russia and Ukraine continues, Bitcoin is moving in a sideways direction. With uncertainty over the outcome of the sanctions against Russia and their effect on the market increasing, it is possible that the crypto with the largest market cap will see even more bloody days.
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Bitcoin trades at $38,284 today with 0.7% profit within the last 24-hours. But, the cryptocurrency quickly broke through previous resistance, trading at $40561 with 7.66% profit per day.
QCP Capital has published a report claiming that the Luna Year of the Tiger was marked by significant negative events, which have had a devastating effect on the global market. The Chernobyl disasters, Cuban Missile Crisis and the Korean War are just a few of these. Now, there is the Russian invasion in Ukraine.
Russia has had its currency, equity and bonds severely affected due to international sanctions. QCP Capital stated that this reaction could help to deescalate the conflict quickly.
Investors might find it profitable to buy the Bitcoin dip when it reverts back to its previous lows. QCP Capital reviewed market reactions to conflicts past to evaluate a possible future market response. According to the report:
Selling wars has been an excellent way to purchase large-scale superpowers in the past. Markets saw positive returns in the 3-6 month period following invasions such as the Vietnam war (1964), Gulf War (1991), Afghan War(2001), Iraq War(2003), and Crimean Crisis (2013).
According to the firm, the present situation is following a pattern where Bitcoin and other assets are bouncing back. Although this situation may be sustainable, it is possible to sustain the current trend for a while, QCP Capital advises caution as global headwinds are likely.
NewsBTC received the following information from Daniele Casamassima (CEO at Pure Fintech), regarding the current state of affairs:
Uncertainty in crypto markets is made worse by close correlations between global crypto markets and financial markets.
Bitcoin: Why Bitcoin Might Follow Old War Patterns
According to the report, a similar scenario occurred in 2001 when the U.S. invaded Afghanistan. After a three-month bounce, the market returned to its previous lowest levels, before falling back into a downtrend.
For Bitcoin, this scenario could lead it to revisit the low $30,000 or break below to last year’s low around $28,880. QCP Capital pointed out that there is a key difference between this and previous conflicts. The U.S. Federal Reserve will soon raise interest rates.
Interest rates stood at 6.1% in 2021. Today, they are trending upwards which may negatively affect global markets. Some believe that the FED or other central banks may use the situation to prolong the conflict, which could lead to a delay in any shifts in monetary policy.
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Casamassima also added this to the potential bullish thesis of Bitcoin:
While digital currencies may be severely affected right now, it could end up being the only viable option for the people who are most adversely affected by the new economic sanctions. The bear market may turn into a bullish market.