The conflict in Ukraine is creating far-reaching consequences is not just in Ukraine and Russia, but throughout the rest of the world. Lives have been lost, millions are seeking refuge in neighbouring nations, and the rhetoric surrounding the conflict is teetering between peace and escalation with the sentiment shifting moment to moment.
The situation does demonstrate the value and long-term growth potential of digital assets and the role they play during difficult times, politically and economically. Investing markets don’t like uncertainty. The Ukraine and Russia situation certainly makes investors nervous. At any given moment, it could escalate, and markets will no doubt respond negatively should that happen. That includes the market for digital assets.
That said, the long-term future for digital assets is still bright. Institutional capital continues to flow into Web 3.0. Ethereum’s transition to a proof-of-stake consensus algorithm is still going to be completed later this summer, and Bitcoin’s next halving event is still going to happen in less than two years.
Risk-on return
It’s 3iQ’s position that these occurrences will likely only increase the long-term value of digital assets as a whole. Add to that the fact that as time passes, greater clarity on the fallout resulting from the conflict in Ukraine and higher inflation rates will begin to reveal itself and investors will eventually gain confidence in ‘risk-on’ assets again.
That trend is already obvious at the time of this writing as Bitcoin, Ethereum, and the broader altcoin market are currently seeing significant bullish price spikes.
As the price of Bitcoin challenges the $48,000 mark, the market capitalization is sitting at over $900 billion. With the weight of the economic sanctions the Western world has levied on Russia, the Russian ruble is now worth approximately $625 billion, just two-thirds of the value of Bitcoin.
Economic sanctions are no doubt driving crypto prices higher. If Russians can’t trust their own government-issued currency, what better alternatives will they have? Don’t be surprised if Russia’s young professionals leave the country in search of greener economic pastures. Those that can’t are likely to look towards digital currencies as a safe haven.
A further pivot to crypto
The European Union, in general, have a lot to think about as the conflict in Ukraine rages on. Will there be further economic sanctions placed on Russia? Will European nations be forced to move away from Russian oil and gas?
While those things haven’t happened yet, they are likely the next steps in continuing to deter Russia’s aggression. Even before the conflict began and well after it concludes, more nations, institutions, and retail investors will continue to see the value of protecting capital by investing in digital assets.
The asset class is going to be a big part of the future and what’s happening at the present moment is only accelerating the cryptocurrency revolution.
