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


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.

Related Reading | Digital “Ukrainian” for Sale: All Funds Will Be Spent on the Needs of the Army

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.

BTC bouncing back on the daily chart. Source: BTCUSD Tradingview

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.

Source: The Crypto Circular by QCP Capital

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.

Source: The Crypto Circular by QCP Capital

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.

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