In the early hours of Thursday, the residents of Ukraine woke with the sounds of explosions across the country. These were the incoming missiles and aerial bombings from the armed forces of the Russian Federation. At the same time, from the north, east, and south, the units of the same army began entering not just the Donbas region, but also the rest of the country. In a day, the whole territory of Ukraine was under attack from the units of the Russian Federation. House before that, the Russian President, Vladimir Putin, ordered his military to enter the country with the purpose of neutralizing its military and stopping its – as the Russian regime labels it – nazi elements. The results were clear immediately as the world watched in shock the first war between two states on the territory of Europe since the end of WW2.
The global economy did not react with any less shock and dismay, leading to the drop in value of all traded entities apart from the commodity. Oil and gold saw a big uptick almost immediately, but cryptocurrencies did not share the same fate. Instead, the crypto market dropped down drastically, losing value as it became clear that the full-scale invasion of Ukraine had begun. That covered the bitcoin BTC token, ethereum’s ETH token, and all other domains of digital currencies. Again, the notion of these tokens acting as a hedge to mainstream financial pathways and events proved utterly faulty. Instead of acting as any hedge of value, the crypto prices aligned perfectly with things like the Nasdaq composite. Now, with the same invasion being an ongoing process, many analysts are completely in the dark about the future trajectory of not just crypto prices, but also the entire global economy, especially those from the European continent.
Shock and Bewilderment
No matter how many news stories about a potential invasion of Russia on Ukraine did emerge in the previous couple of months, there has been a high degree of public acceptance that this is very unlikely. After all, the year is 2022 and the world is not the place it was just half a century ago, especially when it comes to the heart of the oldest continent. But, the reality of global geopolitics and concentrated authoritarian power demonstrated its face once again with the Russian army suddenly pouring across several borders of Ukraine and the missiles and aircraft flying overhead. The shock of the start of the invasion is comparable to huge moments like 9/11, which set a chain of world-changing events two decades earlier.
In this case, the process was followed by an overwhelming sense of shock and total bewilderment, especially because any concepts of a clandestine or hybrid operation went off the table with the first tank on Ukrainian soil. Instead of anything like a huge chess game on a geopolitical level, the attack took place in a manner more similar to wars of the first half of the 20th century – massive forces of one country openly attacking another sovereign nation across its territory. The world truly did not see this on European soli ever since 1939. However, the effect on the markets did not create an unstoppable wave of panic.
The markets, traditional ones just like the cryptocurrency ones, took a hammering on the first day of the invasion. That included a sharp fall in the price of BTC, ETH, and many other digital currencies as much of Europe and later on, North America woke up with the news that the Russian attack on Ukraine began. For many, on that Thursday, the bottom seemed like it was infinitely deep and far away as no one could tell what was the actual goal of Vladimir Putin and his armed forces.
Yet, as the attack moved into its second day, the markets began to steady. The cryptocurrency domain did the same, with the price of bitcoin rising back to the near-40,000 USD level. For the second-largest digital currency network, ethereum, the stabilization point appeared at 2,600 USD, which quickly came back from the point of 2,300 USD. The same applied to things like the US stock market, which saw its best day in 2022 so far right in the wake of the Russian invasion.
Opposition and Consolidation
One of the key elements in the fast-changing situation in Ukraine is the fact that the army of the nation and its other elements, like civilians with weapons, did not break and run away. Instead, the Russian army is facing a persistent and steady opposition, while it is hampered down with its own logistical and command issues.
Most analysts believe that the plan of Vladimir Putin was to see a quick and decisive break in the current government in Kyiv. Nothing of the south happened and there is also a consolidation among the Western nations. With all of the members of the EU now behind the process of arming the Ukrainian army and potential SWIFT sanction incoming, the entire adventure in the same special military action is apparently coming undone at its seams.
The future of the ongoing conflict between Ukraine and Russia, just like the future of the continent of Europe, remains in a fragile balance. Today, it is hard to try to gauge where that balance might move, but it appears certain that it will not be a path of stability and clarity. Instead, another period of drastic turbulence will hit the continent that saw its complete history marked by a similar set of events. Through that, cryptocurrencies will emerge neither as winners nor as losers.
Instead, like a player in a massive esports competition, they will need to find their place in an emergent and ever-shifting economic landscape. There is no doubt that the crypto markets managed to absorb the shock of the start of the invasion of Ukraine. In the coming weeks and months, they will have to find their space in the new realities of Europe, whatever these realities might be.