Will you lose your cryptocurrency during the Russia-Ukraine War?

Fredrick Awino
29.04.2022
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The Russia Ukraine war has really taken a toll on the lives of many, especially the Ukrainians. But the effect is not only felt at the scene of war alone, it has sent shockwaves very many miles away — as far as Australia. But how? Just imagine a cryptocurrency investor who put all his lifetime savings into crypto with the high hopes to rake in fortunes as many people are doing. It was never clear how the war would affect virtual currencies.

Ukraine-Russia was and the crypto worries

The war between Ukraine and Russia has evoked a key talking point about active crypto investors as well as those eying the venture. The questions border on crypto’s key selling point as a global currency that is not beholden to any state authority. So an investor will be wondering who will rescue the crypto investments from going down the drain should the war affect their value. Let’s digest facts about likely scenarios with crypto during and after the war.

Volatility of crypto due to Ukraine Russia War

The volatility of any cryptocurrency is the essence of its value as an asset. This volatility is a result of current affairs happening across the globe such as the Ukraine-Russia war. In fact, just the speculation that there was a possibility of Russia invading Ukraine triggered the turbulence in crypto market.

Out of apprehension and sheer abundance of caution, investors in crypto swung into action that led to decline in the value of bitcoin and Ethereum. The two currencies have been on an upward momentum since then but nobody can confidently say how things will unfold as the war escalates.

Russia using crypto to avoid sanctions

Russia and some of its targeted citizens have borne the brunt of having invaded Ukraine. Europe, USA and their allies have slapped the country with just so many sanctions intended to cut President Putin to size. But questions are out on the streets on whether crypto could be a life savior for the bewildered Russia. Sorry, it will not save them.

Cryptocurrency blockchain is a system that is entrenched by complex algorithms. This means that any transaction performed on crypto blockchain is traceable. No entity can try to outsmart the sanctions. In the unlikely event that the system could be infiltrated, the crypto exchanges too will have a duty to live up to their ethical duty. It is expected that cryptocurrency exchanges are on high alert to profile such malicious transactions.

Another reason why crypto could not save Russia against the sanctions is that the amounts available of such digital currencies can not support the country’s economy. You remember the halving of bitcoins for example? And the pre-set quantity minted in its lifetime? Pooh… .Russia will just have to find other ways of saving their economy, but not through crypto.

Investing in Crypto during the Russia-Ukraine war

It may sound too dare devilish to talk about the possibility of investing in crypto during these uncertain times of war. You possible have a friend or relative who is now in mad a rush to liquidate assets just in case they could be trapped or lose value to the war in Ukraine. But you know what? They may have missed some reality check.

In the beginning of the Ukraine-Russia war, everything was uncertain. In fact, there was a crazy shockwave sent across stock exchanges and the DOW registered dramatic patterns. As is always the case, stock markets are very sensitive to such issues as war. The bitcoin and Ethereum lost their value drastically but has since recovered convincingly. But is it the right time to invest in crypto?

With the knowledge hat crypto is a risky investment just like any other yet its value comes from volatility, it is very easy to get confused. Simply, the more volatile, the higher chances of making fortunes or losing so badly. So what?

We are already 2 months into the Ukraine-Russia war and is still counting. Already, it is possible to identify patterns in the performance of major cryptos during this time of war. For example, bitcoin and Ethereum have significantly scaled in value following an initial decline. So this could be a pointer that possibly, crypto is gaining grounds and defying the ravages of war. All an investor needs to do now is watch out and see the patterns in the next few months before deciding to put any money or add more to existing investments.

Future of cryptocurrency amidst Russia-Ukraine was

Wars by their nature create new things, destroy some or reshape existing ones. The Ukraine-Russia war undoubtedly will change a lot of things. As a result of the war for example, the Russian ruble has plummeted and Ukrainian hryvnia is not sparred either. Nobody is sure how low the war will undermine the utility of their home currency.

Today, there is an insane level of activity at the various cryptocurrency exchanges . People want to change their local money into a currency that promises to remain relatively stable even during and after the war-cryptocurrency is offering this option.

If what is happening now that people are increasingly attaching more value to cryptocurrency at the time of war, more of such may happen in future. In cases where you highly anticipate a great fall in the value of your local currency, perhaps it’s the right time to try cryptocurrency.

In the event that Russia somehow succeeds in using crypto to avoid international sanctions slapped on it by the west, this will send a lot of shock waves. Already, cryptocurrency has to deal with challenges to its being used as an alternative currency and security questions about it. For example, India, with its great wealth of technologists has been very wary of crypto. A success, even a bit by Russia using it in avoiding sanctions will spell doom for crypto proliferation going forward. let’s watch this space and see how crypto navigates the storm caused by the Russia-Ukraine war.

So can you lose your crypto investment?

Maybe it is not yet clear from reading whether you stand a chance to lose money to the Russia-Ukraine war. Of course, I already warned about the lack of a straightforward answer to this, as much as it may be badly needed.

The simple point is this; cryptocurrency naturally increase in volatility whenever any economy of the world experiences a shaking. Remember, stock markets rely on stability and predictability to have a clear picture of what is likely to happen next. At times of war, everything goes and a lot of speculation happens — this probably tells why Bitcoin and Ethereum plummeted at first.

As a cryptocurrency investor, the last guard you have is the gut instinct and risk appetite. You may gain crazily during the war period as is now yet losses too can abound. Just take your time to monitor the performance of the crypto investment. If you reasonably or instinctively feel a further slump will occur, make the move. It may just be necessary to liquidate or transfer the crypto investments to their more stable and predictable stocks.

Author Fredrick Awino