At 4 a.m. local time, Russian President Vladimir Putin announced a military operation against Ukraine live on national television. He claimed the action was necessary to “defend” Russian-speaking people living in the country. The announcement had an immediate and severe impact on Bitcoin’s price.
Here is what three well-known figures in the crypto world said.
Buterin: Ethereum is neutral, but I am not
Ethereum co-founder Vitalik Buterin condemned the decision on Twitter in his native language, Russian:
Extremely disappointed by Putin’s decision to ignore the possibility of a peaceful resolution to the dispute with Ukraine and instead go to war. Russia’s invasion of Ukraine is a crime against the people of Ukraine and Russia.
SBF: Do something good for someone
Sam Bankman-Fried, CEO of the crypto exchange FTX, also took to Twitter. He was far more concise than Buterin and offered a price prediction for Bitcoin in the context of the conflict:
On the last day, the S&P 500 fell about 4%, and BTC fell about 8%. There are two types of people in the world: fundamental investors and algorithmic followers. Fundamental investors look at the situation and are unsure which direction BTC/USD should move.
Algorithmic followers consult the data. Historically, what is the trend? Over the past year there has been a very high correlation between crypto and equities. The main reason is monetary policy: movements in inflation expectations and changes in interest rates in USD and other fiat currencies.
Algorithms look at the data and decide based on that: BTC should be 80% correlated with the S&P 500, with a beta of 4 (meaning if the S&P moves 1%, BTC moves 4%).
Then war happens.
Fundamental investors are neutral, but algorithmic investors see the S&P 500 fall 4% and expect BTC to fall 4*4% = 16% based on historical studies.
Fundamental investors buy and algorithmic investors sell; BTC ends up in the middle, falling 8% that day—half of the 16% predicted by algorithmic investors. At what point is their model adjusted slightly—BTC didn’t fall the full 4x they predicted—and a cycle begins.
He went on to discuss another factor:
Perhaps the real effect here is liquidity. If you are reducing risk, you may sell anything you currently hold because who knows what will happen. And markets are illiquid right now—who is buying volatile assets?
He admitted he did not know what would happen next and concluded:
Do something good for someone. The world could really use it right now.
Nick Schteringard: This man has gone mad
A Russian crypto news outlet with staff in Ukraine has felt the effects directly. Nick Schteringard, editor-in-chief of the Russian-language crypto news site ForkLog, said the lives of several key team members were in danger. He insisted:
It is very clear that this man [Putin] has gone mad and must be stopped.
Schteringard added, bewildered:
I don’t understand people who are now using Twitter to post about how war creates a buying opportunity. Bitcoin what, stocks what—wake up, there is war on your doorstep!