| Hi Everyone,
Yesterday, Russian President Vladimir Putin recognized two separatist regions in Ukraine as sovereign.
In doing so, observers started assuming that Putin would send troops in as “peacekeepers" in an effort to pivot the situation to a local event and not an invasion of Ukraine.
Sure enough, recent reports have revealed that Putin authorized the Russian military to conduct "peacekeeping operations" in the separatist territories.
The world’s attention has been captivated by the escalating situation in Ukraine, with market participants watching closely.
Investors are betting on further declines as the situation in the region intensifies—Asian and European markets ended the day in the red, and both U.S. stock and crypto markets are currently trading in negative territory.
In the past, geopolitical tensions have had mixed effects on equity markets. But each event has its own unique circumstances, making it difficult to decipher how investors will react.
In the events leading up to Crimea returning to Russian occupation in 2014, equities fell, however, markets quickly recovered.
In fact, a study of the impact of geopolitical events on equities showed “a surprisingly small effect of non-economic news."
Financing war with crypto Even before the escalation of events in Ukraine, digital currencies had been under consistent selling pressure, following a downward trend ever since bitcoin hit an all-time high of nearly $69,000 in November.
The geopolitical situation is not helping bitcoin’s price, as the world’s largest cryptocurrency by market capitalization recently fell through the critical $40,000 support level.
However, while most cryptocurrencies seem to be trending lower, crypto donations to certain groups in Ukraine are not. Analysis conducted by London-blockchain advisory Elliptic showed that crypto-related donations to Ukrainian nongovernmental organizations and volunteer groups climbed more than 900% in 2021.
Speaking about the increased usage, Tom Robinson, chief scientist at London-based Elliptic, has stated that “Cryptocurrency is increasingly being used to crowdfund war, with the tacit approval of governments.”
Elliptic, which tracks the movement of cryptocurrency on the blockchain for financial firms and government agencies, also stated that while most of the donations were being made through more traditional payment methods, for example bank wires, crypto donations were becoming more and more commonplace.
The ability of individuals around the globe to send crypto to Ukraine clearly shows the value that crypto has as a borderless, decentralized means of exchanging value.
Cryptocurrencies make cross-border donations easier, and they grant organizers who are raising funds—in this case for military and humanitarian aid—access to wealthy donors who may have previously been out of reach. And by legalizing bitcoin last week, Ukrainian government officials hope to reduce the risk of fraud and corruption.
As events unfold, our thoughts are with those directly impacted by the events in Ukraine. | 