New Delhi: When the war in Ukraine began in early 2022, many talking heads expected a swift conclusion. In their minds, Russia’s military resources were simply too numerous. But it quickly became clear that the Ukrainian people would not take the advance lying down.


Over a year into the war and Ukraine has defied all the odds. Though outnumbered, they’ve held their ground and, over a year into the conflict, proven that bigger isn’t always better.


Unfortunately, it’s still hard to see the light at the end of the tunnel. Will the war end in 2023? Will it stretch on into 2024? Predictions abound. But when it comes to war, certainties are in short supply.


Cyberspace: A New Frontier for Warfare in the 21st Century


One thing that’s set this war apart from the conflicts of the last century is the rise of the internet and related technologies. Today, cyber warfare is an unavoidable reality. The early days of the way in Ukraine saw Russia attempting to create cyberspace chaos for the Ukrainian people.


Fortunately for Ukraine’s citizens, their cybersecurity defense measures have held off their attackers. But cyberspace hasn’t just become a setting for battle in the 21st century. It has also offered new opportunities. One such opportunity lies in cryptocurrencies and the blockchain technology that powers them.


War in Ukraine and Crypto


When the Ukraine-Russia war first broke out, Bitcoin was still riding the crypto wave that began in 2020 and peaked at nearly $70,000. While it had dropped down into the $40,000 range, it was still holding steady at significantly higher values than those pre-2021.


Shortly after the war began, in April 2022, Bitcoin’s price dropped precipitously over a two-month period to $20,000. It stayed there for a few months, but as the war dragged on, its price began to rise.


Since November of last year, Bitcoin has increased significantly, growing 50% in six months.


So, what do the war in Ukraine and crypto have in common? According to a number of analysts, a lot.


Crypto has become one of the easiest, most desirable kinds of donation for the Ukraine government and people. It doesn’t rely on any kind of banking infrastructure. It can be received within minutes with nothing more than an internet connection. And it’s safe from every kind of hacker, including those employed by governments.


This is the reason that the Ukraine government has been vocal about asking for donations in crypto. The war had barely begun when the official Twitter account for the Ukraine government posted, “Stand with the people of Ukraine. Now accepting cryptocurrency donations. Bitcoin, Ethereum and USDT.”


Over $5 million in Bitcoin, Ether, and other cryptocurrencies flooded in within eight hours. According to more recent estimates, more than $212 million worth of crypto has been donated to pro-Ukrainian war efforts since the start of the war. That includes cryptocurrencies like Bitcoin and NFTs.


So, is this increase in crypto donations to the Ukraine cause that’s pushed Bitcoin’s price upward?


It certainly hasn’t hurt. Though it’s probably not the whole story.


Why is the Price of Bitcoin increasing?


There’s no doubt that the millions of dollars in Bitcoin being transferred to the Ukraine government and other pro-Ukraine organizations is having an impact on its overall price.
 
This is in addition to the money that’s also been transferred in support of Russia, though most estimates peg that amount at significantly lower levels than the money supporting Ukraine. However, Russia has also moved toward greater cryptocurrency adoption, even accepting Bitcoin for natural resources exports.


In addition to these thousands of transactions, the devaluation of the dollar could be having an impact on Bitcoin’s price. It’s well known that the United States has seen soaring inflation over the past two years. This could be quietly pushing up the price of Bitcoin.


There are also so many sanctions being thrown around that a lot of people are simply moving some of their liquid assets into Bitcoin. At the moment, it seems just as safe – if not safer – than many of the alternatives.


Unfortunately, there’s still a lot of uncertainty in the crypto waters. The recent collapse of cryptocurrency exchanges like FTX have hurt crypto’s reputation. There’s also been rumblings of stricter governmental controls over the market. And those things have likely caused Bitcoin’s rise in price to be slower than it could have been.


Trading volume simply isn’t what it was three years ago. And that’s held Bitcoin’s price back.


Bitcoin Liquidity Is Drying Up as Crypto ‘Tourists’ Recoil From Industry Disorder (Image source: Kaiko)



So, what will the end of the war in Ukraine mean for the price of Bitcoin?


Obviously, the conflict’s conclusion will signal an end to all of those donations pouring into pro-Ukraine organizations. This reduction in transactions will put downward pressure on Bitcoin’s price. But as we’ve already noted, that’s only one, likely minor, reason for the cryptocurrency’s recent increase in price.


The founder of Bitmedia.IO crypto advertising company Matvey Diadkov, the majority of whose employees are Ukrainians, said about the future of Bitcoin:


“Like any other asset, the future of Bitcoin is uncertain because there are simply too many factors to consider. If other exchanges or crypto-adjacent banks fall, the resulting uncertainty will likely lead to a fall in price. If more countries and businesses begin accepting cryptocurrencies like Bitcoin, its value will almost certainly rise.


Bitcoin’s price won’t be determined by the conclusion of the war in Ukraine, whether it ends in 2023, 2024, or at an even more distant point down the road.”


Instead, savvy investors will look at the world stage as a whole, including its various political, economic, and other factors. But even though no one can accurately predict Bitcoin’s exact future value, there’s no doubt that it and other cryptocurrencies will continue to play a major role in the future of commerce and war.


[Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.]