The invasion of Ukraine this week sparked fears that World War III was about to erupt. When humanity is once again contemplating imminent nuclear destruction, it is easy to understand why some of the optimism has slumped from the markets.
Bitcoin and most other cryptocurrencies have been on a downward slide since just after Valentine’s Day, dropping from $44,000 to a dismal low of under $35,000 after Putin made his move.
You can find out more about how the Ukraine conflict has affected the crypto market by reading this article from earlier in the week.
Eliézer Ndinga, Director of Research at Amun, shared these thoughts with us: “Prices will likely oscillate within a range in the next few months. It’s important to note, however, that crypto is a narrative-driven industry, especially in the short to medium run – which causes discrepancies between valuations and fundamentals.”
Terra is Firmer
It’s not all doom and gloom in the crypto markets, however. The standout success of the past seven days has been Terra (LUNA) which has experienced growth of almost 40%.
This rally was partly sparked by good news from Luna Foundation Guard, a non-profit focused on developing Terra. It raised $1 billion in a private token sale, which is one of the cryptocurrency industry’s largest funding rounds to date. The money will be spent on establishing a Bitcoin-denominated Forex Reserve for UST, a stablecoin on the Terra blockchain.
“One common criticism of algorithmic stablecoins is their reflexive nature and the hypothetical risk of a "bank run" scenario where demand to sell the stable outstrips supply in a way that causes compounding price decreases in both native tokens,” Terra tweeted. “Although the widespread adoption of $UST as a consistently stable asset through market volatility should already refute this, a decentralized Reserve can provide an additional avenue to maintain the peg in contractionary cycles that reduces the reflexivity of the system.”
Proof of Work Ban Postponed
The EU loves to ban things. And its attention recently turned to Proof of Work, the electricity-guzzling consensus mechanism currently used by bitcoin, ether, and other cryptocurrencies.
Time moves slowly when Brussels is involved. So perhaps unsurprisingly, this bold new policy has found itself stuck in the mud of bureaucracy.
Stefan Berger, the MEP who proposed new rules, said a vote has been postponed indefinitely.
"It would be fatal if the European Parliament were to send the wrong signal by voting under these circumstances," he wrote.
Corporate Crypto
Another prominent banker has left his plum job in traditional finance to join the crypto revolution.
Roger Bartlett, former global co-head of operations for Goldman Sachs' markets, joined Coinbase after spending 16 years at the financial giant.
“It’s time to embrace the crypto economy,” he wrote on LinkedIn. “It’s time to [...] follow my passion to help enable the next generation crypto economy. The inspiring purpose-led mission to create economic freedom in the world, in a customer first, automation first approach is a once-in-a-lifetime opportunity to be part of building the next stage of the digital evolution.”
Bartlett is one of many high-profile financial leaders to leave legacy finance and join the blockchain business. Is this a corporate crypto takeover?
Putting The Buterin
Elon Musk has taken a jab at Ethereum founder Vitalik Buterin. Now, Elon is not exactly known as a sartorial pioneer, having recently decided to get a haircut that looked a lot like Kim Jong Un’s.
Nonetheless, he shared a meme showing depiction of Web 1, 2, and 3 which appeared to mock the Ether pioneer’s fashion sense.
The first part of the meme showed Google founders Larry Page and Serge Brin dressed like they were starring in a 90s Gap advert. That was Web 1. The second showed Mark Zuckerberg (played by Jesse Eisenberg) turning up to a meeting in his pajamas. The third, Web 3, was Vitalik dressed as a great cuddly sasquatch.
Gokhshtein Media founder, David Gohkshtein, then tweeted: “Web3 looks sick.”
But whilst Elon was laughing at his bigfoot outfit, Vitalik Buterin was making bold political statements.
On Wednesday, the billionaire said he was “very upset by Putin’s decision” to abandon peace and “start a war instead”.
“This is a crime against the Ukrainian and Russian people,” he tweeted. “I want to wish everyone safety and security, even though I know there won’t be.”
Buterin added: “Reminder: Ethereum is neutral, but I am not.”
Putin the Crypto Whale?
On Thursday, President Biden announced “sweeping financial sanctions and stringent export controls that will have a profound impact on Russia’s economy, financial system, and access to cutting-edge technology”.
But will the measures hurt Putin? Perhaps not, because the Russian dictator may simply choose to swap to crypto and avoid the sanctions.
“If two people or organizations want to do business with each other and are not able to do so through the banks, they can do it with Bitcoin,” Mati Greenspan, founder of the financial advisory firm Quantum Economics, told Bloomberg. “If a wealthy individual is concerned that their accounts may be frozen due to sanctions, they can simply hold their wealth in Bitcoin in order to be protected from such actions.”
Crypto For Ukraine
A crowdfunding campaign has raised more than $4million of crypto for the Ukrainian military.
One NGO received a single Bitcoin donation worth $3 million, Elliptic reported.
“This pushes the total raised by these groups since the start of the invasion to just over $4.2 million,” it wrote. “Volunteer groups have played a critical role in the Russo-Ukraine conflict over the past decade, and they are often very closely linked to the Ukrainian government. These groups are funded by private donors, who have used bank wires and payment apps to donate millions of dollars. Cryptoassets such as Bitcoin have also emerged as an important alternative funding method. They allow quick, cross-border donations, which bypass financial institutions that might be blocking payments to these groups.”
Pussy Riot - the punk band Putin famously jailed - has also launched a decentralized autonomous organization (DAO) and is organizing an NFT drop to raise funds.
“Our goal is to raise funds to donate to Ukrainian civilian organizations who help those suffering from the war that Putin started in Ukraine,” Pussy Riot tweeted. “We’ll be buying an NFT of the Ukrainian flag.”
Things might look bleak outside. But to everything, there is a season. Let’s keep hoping and hodling for a better world.
