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Here’s How the Ukraine Crisis Might Impact Bitcoin and the Crypto Market

Simon Chandler
Last updated: | 7 min read
An Ukrainian soldier in trenches. Source: A video screenshot, Youtube/BBC News


  • The downturn we’ve seen over the past few weeks is largely the result of things other than Russia-Ukraine tensions.
  • Analysts tend to think that direct armed conflict between Russia and Ukraine (and perhaps their allies) will definitely make its impact felt.
  • However, while potentially substantial, most impacts might be relatively short-term in their scope.
  • The threat of armed conflict is a possibility, but it at least shouldn’t be feared by BTC holders, per analysts.

A crisis is brewing. As we type these words, Russia is conducting military exercises along its border with Ukraine, while the United States has put some 8,500 of its own troops on alert, just in case an eastern European war erupts. 

The tension between Russia and Ukraine over the latter’s possible accession to NATO has reached new heights in recent days, and while talks are being held between representatives of the two nations, the situation remains decidedly uncertain. And given just how interconnected the world has become in recent decades, it also remains uncertain for financial markets, including crypto.

Well, according to a wide range of analysts speaking with, the impact of the Ukraine-Russia crisis — and its potential worsening — on the cryptoasset market may not be as dramatic as you’d fear. However, that’s largely because other, mostly macroeconomic factors are weighing the market down at the moment.

Limited impact of Ukraine crisis on crypto up until now

Up until now, the crisis has had some impact on financial markets, including the crypto market. That said, most observers say that the downturn we’ve seen over the past few weeks is largely the result of things other than Russia-Ukraine tensions.

“While the crisis in Ukraine certainly has bearing on the stock markets, it’s important to note the confluence of multiple factors currently affecting the global economy. These include the continued prevalence of COVID-19, negative labor and supply chain shocks, inflation concerns, the [Federal Reserve (Fed)] signaling its intent to raise interest rates, and persistent economic inequality,” says Mark Elenowitz, the president of Zug-based fintech company Horizon.

He suggests that, while the Ukraine crisis may be causing some concern among investors, the current downturn likely finds its primary causes in much deeper, more systemic trends. This is also the view of Marc Chandler, the Managing Director at Bannockburn Global Forex, who says that outside of Russian and Ukrainian bonds (and the Russian rouble), the impact is “minor at best.”

“Two reasons, I think: first there are bigger immediate issues for more investors like the Fed meeting and the aggressive tightening many anticipate, plus the market was overvalued by most estimates; and second, look at what happened in [February] and March 2014 when Russia invaded Ukraine, took and annexed Crimea,” he told

In 2014, Russia’s annexation of Crimea and incursions into Ukraine did indeed have a negative effect on stock markets worldwide, with European and — in particular — Russian markets most impacted. However, the effect was relatively short-lived, especially in the United States, where the S&P 500 ended the year at an all-time high.

Indeed, most analysts say that the crypto market should be worried about other things right now.

“Stock markets and cryptos are going down primarily because they went up a lot, notably the US stock market,” said Bloomberg Intelligence analyst Mike McGlone. “I think the Fed has reached its limits as indicated by 13% US [producer price index] reaching a 40-year high.”

McGlone notes that the Federal Reserve is mandated to fight inflation and that “cryptos are among the most speculative, inflated assets” out there, meaning they’re due to suffer in the event of a sharp rise in interest rates. On the other hand, he argues that bitcoin is “the least risky crypto” and that it could eventually replace gold as a risk-off asset.

McGlone also accepts that the Ukraine crisis has had some impact on the crypto, even if it hasn’t been the chief factor in recent slides. This is also the view of analyst and author Glen Goodman, who points out that the crypto market has been strongly correlated with smaller US stocks for many months now. 

“During January’s downturn, bitcoin was moving almost in lockstep with American small-cap stocks. The Ukraine crisis is weighing on the valuations of most assets considered to be in the ‘risky’ category, which includes many stocks and nearly all cryptocurrencies,” he told

What if there’s war?

But while most analysts hold that the Ukraine crisis up until now hasn’t had a substantial impact on crypto, they also tend to think that direct armed conflict between Russia and Ukraine (and perhaps their allies) will definitely make its impact felt.

“Should armed conflict occur, crypto markets could certainly see a significant decline, although in my view, this is likely to be caused indirectly through the conflict’s impact on oil and food markets. Armed conflict would likely cause food shortages through supply chain disruptions,” said Mark Elenowitz. 

He also suggests that sanctions imposed against Russia would likely have the effect of cutting off a major oil pipeline to Europe, potentially causing gas and oil prices to rise. 

“As cryptocurrency has become far more correlated with traditional markets over the past two years, if these commodity prices are hit, the prices of crypto are also likely to be affected in the short term,” he added.

Other observers also say that, while potentially substantial, most impacts will be relatively short-term in their scope.

“History tells us that stock markets initially react badly to armed conflict involving Western countries, and we can expect cryptos to follow the stock market downwards. But the good news is that the negative impact on markets tends to be short-lived,” said Glen Goodman, who added that markets tend to recover quickly once investors realize Western economic growth continues unabated.

This is a fairly optimistic take, yet some analysts don’t think there’s much of a threat that the current Ukraine-Russia crisis will escalate into a war.

“I think full-fledged armed conflict is unlikely, yet crude oil and the grains are pricing for the risks of one of the worlds largest crude oil exporters — Russia — threatening to invade one of the worlds largest grain exporters — the Ukraine,” said Mike McGlone.

For Blockchain Coinvestors CEO Lou Kerner, the threat of armed conflict is a possibility, but it at least shouldn’t be feared by BTC holders.

“During times of war, gold performs very well, so bitcoin should decouple from stocks and trade up if the crisis descends into an armed conflict,” he told

Bitcoin has long been considered as ‘digital gold’ by many analysts within the crypto sector, yet some commentators continue to insist that it has more in common with stocks and other risk assets, meaning that investors shouldn’t be so sure it will remain unscathed if Russia and Ukraine lock horns.

“I think [crypto] has most recently shown itself to be a risk asset rather than an inflation hedge,” said Marc Chandler. “Perhaps the asset class has not been around long enough to see ‘longer-term’ relationships.”

Recovery for bitcoin and crypto

Assuming that the Ukraine-Russia crisis does descend into conflict, commentators continue to say that the ability of the crypto market to recover will depend more on macroeconomic factors than on some kind of political settlement or ceasefire.

“The main factor weighing down markets is the prospect of higher interest rates in the States and throughout the Western world. Most wars involving Western countries have a far smaller economic impact than big rises in rates,” said Glen Goodman. 

In other words, don’t expect an upswing in the crypto market until certain macroeconomic threats — inflation, rising interest rates — settle down. That said, Mike McGlone says that, for bitcoin at least, the medium-to-long-term future looks bright.

“I think bitcoin has limited downside below USD 30,000 and is likely building a base for the next key big threshold around USD 100,000. Bitcoin is a very small fraction of global portfolios and most managers are realizing greater risks are staying on zero allocations to the revolutionary technology/asset, notably vs. most equity positions, which may have become a bit bloated, notably with bonds providing little yield,” he said.

Learn more: 
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