Yes, wars clearly affect the cryptocurrency market (crypto), but the impact varies depending on the type of war, its duration, and the state of the global economy at the time. Hereโs a simple and direct explanation:
๐ 1. State of Fear, Uncertainty, and Doubt (FUD)
When any war breaks out, the first reaction in the markets โ whether traditional or digital โ is fear. Investors flee from risky assets (like cryptocurrencies) and head towards safe havens (like gold and the dollar). The result? A temporary drop in crypto prices.
๐ข 2. Shift to crypto as an alternative refuge
In some cases, especially when the war is in countries suffering from economic collapse or international sanctions, people resort to crypto to escape inflation, sanctions, or the collapse of their local currency. Example:
Ukrainians and Russians at the beginning of the 2022 war significantly increased their use of Bitcoin and stablecoins (like USDT).
๐ 3. Violent market volatility
Any new news about the war can flip the market in seconds, whether up or down. Investors act more out of emotion than logic during crises.
๐ 4. Indirect impact through the global economy
If the war affected oil prices, inflation, or central bank policies, this would reflect on investor decisions in all markets, including crypto.
Currently, could a war between Iran and Israel break out that would affect the cryptocurrency market?
Summary ๐ก
Wars usually start with a negative impact on crypto, but over time they can lead to increased interest in it as an alternative to the traditional financial system โ especially in affected countries.