War. What is it Good For? Absolutely Nothing... and Also Major Price Volatility

Prior to the war that has just been declared, cryptocurrency had just barely began to move out of the Covid crisis. All of the major volatility that has come with this unprecedented pandemic was just beginning to settle in early February, and then Russia-Ukraine conflicts began to notably emerge.

Two years after the world was rocked by this deadly virus, there are still impacts with new variants such as Omicron continuing to have its presence felt both in the real world, and in crypto markets.

But now, as of Thursday, we are officially experiencing a new crisis that is impacting all of the worlds' markets, along with our thoughts... war in Europe.

Source:BBC News

There are plenty of sources pertaining to the humanitarian and political impact of such events, and Santiment can not come close to encapsulating the terrible pain and sadness that much of the world is experiencing from these recent events. However, we do have a duty to cover the economical ramifications of what has been occurring.

For a long time, gold (and a few fiat currencies such as USD and CHF) was the “safe haven” for investors to flock to during periods of crisis. And with the emergence of Bitcoin, over the last decade in particular, there is increasing hope that cryptocurrency will be able to carve its own path (Bitcoin, in particular) to make its claim as a safe haven of its own.

However, this has yet to happen from a macro perspective.

Comparison of Bitcoin, S&P 500, and gold price over the past 3 months.

A shift in trader behavior and their perceptions of different sectors obviously does not happen overnight, but this can undoubtedly happen gradually.

The combined social volume on the terms "war", "Ukraine", and "Putin" paints an obvious story that crypto platforms are VERY much monitoring this situation:

Frequency of "war", "Ukraine", and "Putin" over the past 3 months.

Traders often look for explanations for why markets are dropping, and these kinds of negative keywords often come up as people latch on to the reason why their portfolio balances are dropping.

In the case of the Ukraine-Russia conflict, we obviously understand that there is a great deal of truth behind the war pushing cryptocurrencies, equities, and other markets down. But as we've learned from the pandemic over the past 2 years, once the initial shock wears down, there is very often a major price rebound:

Pandemic-related keyword frequency between February and May of 2020.

Notice the very clean inverse correlation between the frequency of discussions related to the pandemic, and the price of Bitcoin. In hindsight, it was very clear to us that after the initial shock of COVID-19 wore off, prices would be able to recover back to the then $10k+ price levels.

Meanwhile, key stakeholders are making major cumulative changes in their hold on the respective supplies of different assets:

24-hour accumulation and dump percentages within 3-month max/min range of whale holdings.

$ENJ, $AXS, $COMP, $BAND, and $ETH are all seeing some big accumulation as whales have jumped in on lower prices. Obviously, prices have recovered fairly rapidly already, but this doesn't necessarily mean things will continue.

In all likelihood, markets will continue to be volatile and will be contingent on tensions between Russia and Ukraine improving or becoming worse from here. Of course, nothing is guaranteed in crypto markets. We must factor in the unpredictability, and lessons learned that have proven that markets always move in the direction of the crowd's least expectation.

Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.

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