Scenarios for Bitcoin, How the Market Has Responded to Past Wars

Bitcoin is moving sideways around its current levels as the war started by Russia with Ukraine continues. The first crypto by market cap could see more bloody days ahead as uncertainty over the outcome, sanctions on the Russian government and their impact on the market mounts.

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At the time of writing, Bitcoin was trading at $38,284 with 0.7% gains in the last 24 hours. However, it quickly managed to break above previous resistance and traded at $40,561 with a gain of 7.66% on the daily chart.

BTC is bouncing off the daily chart. Source: BTCUSD trading summary

in a recent report published by QCP Capital, the company claims that the Lunar Year of the Tiger was marked by significant negative events that took their toll on global markets. These include the Chernobyl disasters, the Cuban Missile Crisis, the Korean War and now the Russian invasion of Ukraine.

As a result of the international sanctions against Russia, its stocks, bonds and currencies have been badly hit. This response, QCP Capital said, could contribute to a rapid de-escalation of the conflict.

Thus, buying the Bitcoin dip as it stumbles back to previous lows could be a profitable option for investors. QCP Capital has assessed the market’s response to past conflicts in an effort to assess a possible future market response. The report claims:

Historically, war-related sales have been great buying opportunities, especially large-scale wars involving superpowers. In the Vietnam War (1964), the Gulf War (1991), the Afghan War (2001), the Iraq War (2003) and the Crimean Crisis (2014), markets saw positive returns for 3-6 months after the invasion .

The company believes that the current situation follows the pattern as Bitcoin and other assets appear to be bouncing back. This situation could continue on its own, at least for the short term, but QCP Capital recommends caution as there is a lot of potential global headwinds.

Source: The Crypto Circular by QCP Capital

Daniele Casamassima, CEO of Pure Fintech told Coin-Crypto about the current situation:

This uncertainty in the crypto market is further hampered by the fact that there is now a close correlation between financial markets and global crypto markets.

Break Or Bounce, Why Bitcoin Might Follow Old Patterns Of War

A similar situation arose in 2001 with the US invasion of Afghanistan, the report said. At that point, the market bounced back for 3 months and then reverted to a downtrend that broke previous lows.

Source: The Crypto Circular by QCP Capital

For Bitcoin, this scenario could see it revisit the low $30,000 or move lower to last year’s low around $28,880. A key difference from previous conflicts, as QCP Capital noted, is the impending rate hike by the US Federal Reserve.

In 2021, interest rates stood at 6.1% and today they only seem to be moving upwards, which could have a negative effect on global markets. Others believe the opposite: If the conflict continues, the FED and other central banks could use it as an excuse to delay a monetary policy shift.

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Casamassima added the following regarding a possible bullish position for Bitcoin:

The digital currency, while currently hard hit, could become the only viable option in the long run for those people most affected by new economic sanctions. Therefore, the bear market can turn into a bull market.

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