Current world events are shaping up to test crypto in a big way. What happens next is going to affect the attitudes of people towards crypto in one way or another. Two of the big tests for crypto are the possible Russian invasion of Ukraine and the Canadian trucker protests.
None of this is easy to predict because the crypto ecosystem is broad, with many different populations each having its own needs and goals: typical investors may need to rebalance their portfolios and engage in cryptocurrency trading if they think the Fed is going to taper Quantitative Easing and raise interest rates; a farmer in Saskatchewan who has just seen their donation to the Canadian truckers frozen by TD Bank is quickly going to lose trust in both fiat and traditional banking institutions; a shopkeeper in Nizhyn, Ukraine may be wondering how to get their savings out of the country before the political situation further deteriorates.
The price of gold is already on the rise, but the fiat value of BTC seems to not have had a significant move yet (at least in USD). However, if there is a sudden influx of new participants into crypto we could see this change rapidly. A few wealthy people are not necessarily a match for a huge number of new bit players, as we saw during the 2021 meme stock squeezes of GameStop and AMC.
The result of all this uncertainty ought to be that crypto will rise as valued against fiat, principally USD. If this happens, it will have the broad psychological effect of validating crypto as both a store of wealth and medium of exchange for free people. If it does not, the prevailing mainstream psychology will not be difficult to predict: dismiss crypto as an exotic asset class that is not “real” – with the mass media willingly echoing the sentiment.
All this incertitude is amplified by social media, making accurate predictions even more difficult. Who knows what the supporters of the Canadian truckers are talking about on Telegram right now? If we are on the cusp of new “BTCrefugee” populations entering the crypto ecosystem, each with different needs, there could be a good deal of instability, at least until all the populations within the ecosystem reach a new equilibrium.
Conflict situations generate many losers, and a handful of winners, who win big. Ordinary people marginalized by economic instability typically have to pay through the nose for whatever they need and don’t have. When wealth starts to float around, those with the muscle inevitably grab it and flow downstream to safer waters. We will see if Bitcoin really is “freedom money”, or whether the usual suspects such as the Canadian government can find a way to shake it out of their citizens. If that happens, then confidence in crypto will ebb away. If it does not, then the future looks brilliant for crypto.
By: Maria Group