Crypto-Asset Values Will Push Their Way Back Amid Russia-Ukraine Crisis
It is quite possible that the geo-economic situation could lead to higher subscription rates in alternative assets.
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The conflict in Ukraine has far-reaching consequences not only in Ukraine and Russia, but in the rest of the world. Lives have been lost, millions of people are seeking refuge in neighboring countries and the rhetoric surrounding the conflict swings between peace and escalation, with the sentiment changing from moment to moment.
The situation demonstrates the value and long-term growth potential of digital assets and the role they play during difficult times, politically and economically. Investment markets do not like uncertainty. The situation in Ukraine and Russia is certainly making investors nervous. At any time, it could escalate, and the markets will no doubt react negatively if that happens. This includes the digital asset market.
That said, the long-term future of digital assets remains bright. Institutional capital continues to flow to 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.
Yield risk
3iQ’s position is that these events will likely only increase the long-term value of digital assets as a whole. Add to that the fact that over time, greater clarity on the fallout from the conflict in Ukraine and higher inflation rates will begin to emerge and investors will eventually regain confidence in risky assets.
This trend is already evident at the time of this writing, as Bitcoin, Ethereum, and the broader altcoin market are currently experiencing significant bullish price spikes.
As the Bitcoin price challenges the $48,000 mark, the market capitalization sits at over $900 billion. With the weight of the economic sanctions that the western world imposed on Russia, the Russian ruble is now worth around $625 billion, barely two-thirds of the value of Bitcoin.
Economic sanctions are undoubtedly driving up crypto prices. If Russians cannot trust their own government-issued currency, what better alternatives will they have? Don’t be surprised if young Russian professionals leave the country in search of greener economic pastures. Those who cannot will likely turn to digital currencies as a safe haven.
Another pivot to crypto
The European Union, in general, has a lot to think about as the conflict in Ukraine rages on. Will there be new economic sanctions imposed on Russia? Will European nations be forced to move away from Russian oil and gas?
While these things have yet to happen, these are likely the next steps in continuing to deter Russian aggression. Even before the start of the conflict and long after it ends, more and more nations, institutions and individual investors will continue to see the value in protecting capital by investing in digital assets.
The asset class is going to be a big part of the future and what is happening right now is only accelerating the cryptocurrency revolution.