FTX CEO On What Russia-Ukraine Crisis Holds For Bitcoin’s Future

Key Takeaways 

• Bankman-Fried says the Russia-Ukraine crisis has brought crypto into a new regime.
• How this regime will play out is up to two major factions of investors, he explained.
• Market participants have noted that his prediction may already be playing out.

Russia’s military action against Ukraine has had unavoidable effects on the crypto market. While still not convinced of what the long-term fate of Bitcoin will be amidst the crisis, Sam Bankman-Fried has pointed out several scenarios that could play out in the market.

Bitcoin is in a new regime, says FTX CEO

In a long Twitter thread, SBF, as Bankman-Fried is popularly called, explained that market forces in a war situation were highly unpredictable. Regardless, the FTX CEO sees two possible directions that the Bitcoin market could take based on how different types of investors trade.

For one, the leading cryptocurrency could be dominated by investors who focus on the fundamentals. These investors, by being focused on the advantages of Bitcoin, remain unmoved and even buy up the asset in the midst of panic.

Conversely, algorithmic investors, as he calls them, are not so confident in Bitcoin. These investors consider the benchmark crypto to be a risk asset that is correlated with the stock market. Hence they sell off their Bitcoin positions when the stock market reacts to war.

“Fundamental investors are neutral, but algorithmic investors see the S&P500 go down 4%, and so expect BTC to go down 4*4%=16% based on historical studies,” SBF said.

However, SBF concedes that it remains uncertain what side of the divide any investor should stay on. This is because no one side can be considered to be “right.” But, in the long term, these opposing forces will tend to meet each other in the middle of the market, he adds. 

Based on this analysis, the crypto executive reasons that the Bitcoin market is in a new regime than it was “in the last year and half.” In general, SBF notes that war remains a net negative occurrence in the world, especially for regions involved in the conflict.

The crypto market is closely monitoring the crisis

SBF’s assessment met with agreement from other market players. Ki-Young Ju, the CEO of Crypto Quant, noted that at the moment, on-chain activity pointed to the scenarios already playing out.

Ju opined that institutional investors who bought Bitcoin directly from the market were not selling. Meanwhile, those who were running algorithmic trading bots were handling the most valued crypto-like tech stocks.

The conflict itself has also drawn comments from key crypto market figures. Co-founder of Ethereum, Vitalik Buterin, has condemned Russia’s decision to abandon peace talks and launch an attack on Ukraine. Buterin, who is Russian by nationality, has stated that he stands in support of Ukraine.