Cryptos: The War And Peace Dilemma

Ever since the conflict in eastern Europe worsened to a full-fledged war, crypto prices have proved exceedingly volatile, as markets debated whether crypto helped the war effort more or the sanctions evasion more. War time has been comparatively more rewarding for many cryptos despite the agony that unfolded. At the same time, some cryptos have recorded more gains in peace time than in war time, perhaps as the Fed’s war against inflation spooked investor sentiment much more than the war in eastern Europe.

In order to make sense of the price movements both in war time and in peace time, we have contrasted the crypto price movement in two monthly time blocks. The first block between February 22 (a day before the invasion) and March 22 is dubbed war time and the second block between January 22 and February 22 is labeled peace time.

Before we present the findings, here is a quick summary of the crypto markets at press time.

Volatility was on display in crypto markets early on Wednesday as the splendid rally on Tuesday gave way to losses in almost all the leading cryptocurrencies. Market cap capitulated close to 1.5 percent in the past 24 hours, dropping to the $1.91 trillion level. Thailand’s crypto ban, El Salvador’s Bitcoin Bond issue postponement etc. were some of the developments that influenced market sentiment.

Bitcoin dropped more than 2 percent overnight to $41,962.59. BTC ranged between $41,877.51 and $43,071.35 in the past 24 hours. Bitcoin dominance dropped to 41.8 percent.

Ethereum also shed more than 2 percent overnight and is currently trading at $2,950.38. ETH traded between $2,933.31 and $3,023.05 in the past 24 hours. Ethereum’s dominance increased to 18.6 percent.

ETH spinoff Ethereum Classic (ETC) surged more than 8 percent and moved up to the 27th rank among all cryptocurrencies.

Apecoin (APE), the token of the Bored Ape NFT ecosystem surged 12 percent overnight and reclaimed the third spot among Metaverse & NFT category cryptocurrencies.

Loopring (LRC), surged 42 percent overnight following announcement of partnership with Gamestop in the NFT space.

The military strikes and the Russian invasion of Ukraine which began a little past 5 AM Eastern European Time on February 24 (or 11 PM ET on February 23) is nearing a month, taking its toll, not just in the battlefront but across the globe and across the global markets.

Asset valuations repositioned to respond to the changed political and economic scenario as the invasion was met with a series of economic sanctions imposed swiftly by several nations around the world. The firepower at the frontlines fueled the fear quotient among market participants causing valuations to whipsaw wildly.

Market leader Bitcoin closed at $42,358.81 on March 22, at $38,286.03 on February 22 and at $35,030.25 on January 22. Well, that implies a 10.64 percent rally in war time and a 9.29 percent rally in peace time.

Likewise, Ethereum, ranked 2nd in the overall crypto sphere and 1st in the Smart Contracts category closed at $2,973.13 on March 22, at $2,639.30 on February 22 and at $2,405.18 on January 22. The leading alternate currency posted a 12.65 percent rally in war time and a 9.73 percent rally in peace time.

BNB, ranked fourth overall and 1st in the Centralized Exchange Crypto category closed at $404.31 on March 22, at $374.31 on February 22 and at $358.10 on January 22. BNB too posted superior gains in war time (8.01%) than in peace time (4.53%).

7th ranked Terra (LUNA), the most valuable crypto asset in the DeFi category, which was at $62.57 on January 22, dropped to $54.78 by February 22 but surged to $93.00 by March 22 implying war time gains of close to 70 percent, versus the peace time loss of 12 percent.

Cardano (ADA) ranked 8th overall and 1st among staking cryptocurrencies closed at $0.9764 on March 22, at $0.889 on February 22 and at $1.07 on January 22. That implies a 9.83 percent rally in war time and a 16.92 percent drop in peace time.

11th ranked Polkadot (DOT), the most valuable crypto asset in the Web 3 category, which was at $18.23 on January 22, dropped to $16.56 by February 22 but surged to $20.25 by March 22 implying war time gains of more than 20 percent, versus the peace time loss of 9 percent.

Dogecoin (DOGE), ranked 13th overall and 1st among meme cryptos dropped around a percent in peace time (from $0.1329 as on January 22 to $0.1316 on February 22) and close to 7 percent in war time as it settled at $0.1225 on March 22.

32nd ranked Decentraland (MANA), the most valuable cryptocurrency in the Metaverse and NFT categories jumped 30 percent during peace time to $2.63 on February 22, from $2.03 a month earlier. However, in war time, the crypto token dropped by 7.60 percent to close at $2.43 by March 22.

Within the crypto asset class, the price movements before and after the war have been varied. The differentiating factor could be the use cases that each crypto asset claims. The war has demonstrated that technology and potential uses cannot play second fiddle to the power of price volatility and speculative demand.

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