Crypto in a time of war

March 16th, 2022

March Market Outlook

Crypto in a time of war

Bitcoin has now been in existence for over 13 years. Last year it crossed the $1 trillion threshold in market value.

But crypto is still a young and relatively small asset class when measured against equities, bonds, commodities, real estate, and other investable categories. For many such traditional assets, we have a century or more of performance data in various settings like wars, recessions, and heightened inflation.

Now, for the first time, we are now witnessing how bitcoin and crypto will perform in an environment that includes:

  • Perhaps the most significant military conflict since the second world war
  • Rapidly rising prices, including food and oil
  • A Federal Reserve aiming for materially higher interest rates

What’s the outlook for bitcoin in the coming months and years?

Crypto in a time of war

In our view, nothing in the current environment alters the fact that bitcoin remains the “hardest” asset in history.

Over the course of the 2+ year COVID pandemic, bitcoin has already proven to be an attractive store of value to millions of people. And we expect to see ever more market participants changing their prior negative views on bitcoin.

The Ukraine conflict — coming on top of the still ongoing global pandemic — will also lead to a rise in what was already a world war level of public indebtedness prior to COVID-19.

Unsustainable government debt could trigger a host of financial cataclysms: sovereign debt defaults, currency crises, or other forms of financial instability that highlight bitcoin’s unique characteristics and value.

The weaponization of fiat currencies and the traditional banking system, regardless of the validity or support for such actions, is also likely to trigger a decline in US dollar dominance and lead more governments towards adopting bitcoin.

Crypto in a time of war

On top of the case for bitcoin as an inflation and macro hedge, bitcoin (and the rest of crypto/web 3 more generally) is a technology protocol and platform that continues to develop. Notable progress on scalability is being made to enable a wide range of smart contracts, DeFi, DAOs, NFTs, etc.

Bottom line: both the need for bitcoin and visibility on further mainstream adoption for a multitude of use cases has never been stronger.


  1. Market Movements
  • As we are set to publish bitcoin has declined slightly since the start of the conflict in Ukraine while also seeing an increase in its crypto market “dominance” (bitcoin’s total crypto market value share)
  • In February crypto rebounded, with Bitcoin (BTC) up +12.2% and Ethereum (ETH) up +8.5%

2. On-Chain Insights

  • In February the average number of daily transactions (0.4%) and payments (1.1%) gained slightly over January
  • The continuing increase in bitcoin’s estimated hash rate speaks to the medium-term price confidence of bitcoin miners and the availability of economically attractive sources of energy

1. Market Movements

In February crypto rebounded, with Bitcoin (BTC) up +12.2% and Ethereum (ETH) up +8.5% (Table 1). A growing sense that Federal Reserve monetary tightening may not be as aggressive as previously anticipated may have contributed to crypto’s reversal from January.

Table 1: Price Performance: Bitcoin, Ethereum, Gold, US Equities, Long-dated US Treasuries, US dollar

Crypto in a time of war

Sources:, Google Finance

However, US equities did not match crypto’s uptick and were down -3.1% for the month. For the year crypto, equities, and long-dated US bonds are all down. In contrast, traditional safe-haven assets like gold and the US dollar are up for the year.

As the conflict in Ukraine has broken out we are seeing crypto prices diverging on some days from what is happening with the US equities market (tech equities in particular). This divergence provides some support for our view that crypto possesses unique characteristics, including bitcoin’s role as an inflation hedge and the ability of crypto to operate as an alternative “payment rail”, as noted above.

2. On-Chain Activity

In February, all bitcoin on-chain metrics we track showed gains (Table 2).

Table 2: January vs February bitcoin on-chain network activity

Crypto in a time of war

The average number of daily transactions (0.4%) and payments (1.1%) saw a slight increase in February. While average daily active addresses followed suit with a 2.8% increase.

Transaction fees gained 1.6% from January through to February, and overall total BTC transactions and payments made using the platform in February increased 2.5% and 1.3%, respectively compared to January.

3. What we’re reading, hearing, and watching


Beyond Crypto

Important note

The research provided herein is for your general information and use and is not intended to address your particular requirements.

In particular, the information does not constitute any form of advice or recommendation by and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.

Appropriate independent advice should be obtained before making any such decision.

The original post Crypto in a time of war was originally published in @blockchain on Medium, where people are continuing the conversation by highlighting and responding to this story.