Russian President Vladimir Putin announced a military operation against Ukraine on national television this morning at 4:00 a.m. local time. He claimed the measures were necessary to “protect” Russian-speaking people living in the country. The announcement immediately sent shockwaves through financial markets and knocked down the price of Bitcoin.
Here is what three prominent figures in the cryptocurrency community had to say.
Buterin: Ethereum is neutral, but I am not
Ethereum founder Vitalik Buterin condemned the decision on Twitter, posting in his native Russian:
“Extremely disturbed by Putin’s choice to forgo a peaceful resolution of the dispute with Ukraine and instead start a war. Russia’s attack on Ukraine is a crime against both the Ukrainian and Russian peoples.”
SBF: Do something kind for someone
Sam Bankman-Fried, CEO of crypto exchange FTX, also shared his thoughts on Twitter. He was less succinct than Buterin and tried to explain Bitcoin’s price move in the context of the conflict:
“Over the last day the S&P 500 fell about 4% and BTC about 8%. There are two types of market participants: fundamental investors and algorithmic followers. Fundamental investors look at the situation and are uncertain which direction BTC/USD should move.”
Algorithmic followers look at the data. What is the historical trend? Over the past year the correlation between crypto and equities has been very high. The main driver is monetary policy: changes in inflation expectations and interest rates in USD and other fiat currencies.
Algorithms look at the data and conclude: 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 a war happened.
Fundamental investors remain neutral, but algorithmic investors see the S&P down 4%, so BTC is expected to move 4 x 4% = 16% based on historical studies.
Fundamental investors buy while algorithmic investors sell; BTC ends up in the middle and drops about 8% on the day — half of the 16% the algorithmic models predicted. At that point their models adjust slightly — BTC fell less than the predicted 4x — and the cycle continues.
He then shifted gears:
Maybe the real effect here is liquidity. If you don’t want risk, you might sell what you have now because who knows what happens next. And markets are illiquid right now — who is going to buy volatile assets?
He admitted he doesn’t know what will happen next and concluded with a human note:
Do something kind for someone. The world could use it right now.
Nick Schteringard: This man is out of his mind
Russian crypto newsrooms with staff in Ukraine are already feeling the effects. Nick Schteringard, editor-in-chief of the Russian-language crypto news outlet ForkLogin, said several key staff members were at risk and spoke forcefully:
It’s absolutely clear that this man [Putin] is completely out of his mind and must be stopped.
Schteringard added, bewildered:
I don’t understand people on Twitter saying the war creates a buying opportunity. What Bitcoin, what stocks — wake up, war is at your door!