April 15, 2024: “War is the science of destruction,” former Canadian Prime Minister John Abbott had once said.
As the crisis between Iran and Israel brews in the Middle East, escalating fears of an all-out war, the global crypto ecosystem keeps an observant eye on the occurrences, just days ahead of the scheduled Bitcoin halving event. The initial repercussions of this conflict in the Middle East have already resulted in Bitcoin’s value dropping by 7.7% to $US 62,773 on Saturday, its lowest point since March.
On April 13, Iran launched hundreds of drones, cruise and ballistic missiles towards Israel, in an unprecedented direct attack against the latter. The attacks come in the backdrop of Israel bombing the Iranian embassy in Syria recently which killed several of Iran’s top military officers, as per reports. Simultaneously, Israel is engaged in another war with the Hamas group in Palestine, and the conflict has already seen the loss of over 33,000 lives in Gaza in less than a year.
Almost a week after Iran had launched a massive drone and missile attack on Israel, the latter retaliated with missile strikes in Isfahan city in Iran on Thursday night. The fresh attack by Israel on Iran has further aggravated fears regarding a full-blown war in the Middle East as analysts fear a drop in cryptocurrencies ahead of the Halving 2024 event.
Since the attack by Iran, traditional markets were cushioned from any major effects as they were shut on Friday and opened only by Monday. However, the 24/7 nature of crypto markets ensured that the full-blown geopolitical unrest resulted in Bitcoin’s value dropping by 7.7%, from the high of $72,797 on April 8, 2024 to $US 62,773 on Saturday.
In the coming few days, Bitcoin Halving is scheduled to occur, and crypto market sentiments are running bullish. Halving is a programmed event where the reward to miners for mining Bitcoins and creating new blocks in the blockchain, gets reduced by 50%. The halving event is scheduled after the completion of every 2,10,000 blocks which roughly takes four years.
Historical precedence of post halving events in 2012, 2016 and 2020 has shown that the value of Bitcoin has surged exponentially. Taking a cue from past events, investors, trade analysts and crypto enthusiasts have again put their faith in the bullish sentiments, hoping BTC would cross the mark of $150,000, once the 2024 halving gets done. The scheduled halving date is April 19-20, 2024.
However, the current war situation between Iran and Israel and its potential to turn into a geopolitical unrest, has made the situation extremely complicated, as crypto enthusiasts await the halving date with bated breaths.
Ukraine-Russia War and Crypto
Analysts have found a trend in donations through cryptocurrencies since the full-blown invasion of Ukraine by Russia in February 2022. The Ukraine-Russia war stands out as a prime example of modern combat which is fought using state-of-the-art military equipment, televised through go-pro cameras and the use of digital currencies to fund military and medical needs.
As per a report by World Economic Forum (WEF), $212 million worth of cryptocurrencies was donated to pro-Ukrainian war efforts since February 2022 out of which $80 million went to the Ukraine government alone. The report further states that the donations were used to purchase military equipment, drones and medical supplies. An NFT of Ukrainian flag was also sold for $ 6.75 million to help the cause.
Similarly, $ 5.4 million worth of crypto was raised by pro-Russian groups to assist the Kremlin.
As per findings prepared by Chain Analysis, Ukraine ranked 3rd while Russia ranked 9th in the Global Crypto Adoption Index prior to the full-blown invasion in February 2022. However, since the war broke out, there was a significant rise in crypto transfers in both the countries.
Is war good for the crypto ecosystem?
Asking this question is akin to asking if cancer is good for the body.
The obvious answer is no.
War profiteering is a byproduct of degeneration of human values – an extreme end of human ambition where morality and ethics die a decaying death. Renowned author George Orwell had once said, “war against a foreign country only happens when the moneyed classes think they are going to profit from it.”
Echoing similar sentiments, the global repercussions of any global war seems to be only negative as it will deter investors and cripple the technological advancements required to run the crypto ecosystem. Countries will spend more on defense budgets than on creating technological infrastructure to support crypto markets.
The shared dream of the creators of bitcoin and blockchain technology was to create a decentralized financial system for the peer-to-peer transfer system, which was not dependent on any government or regulatory agency. A global unrest like situation would only mean governments bringing stricter tax laws in the crypto market to suit their needs first and finance the war.
Hope Ahead
Despite major escalation between Iran and Israel, markets opened positively on Monday thanks to a statement made by US president Joe Biden where he categorically asked for de-escalation and avoiding a wider war. Bitcoin, which had slumped to $62773 on Saturday, gained 3.4% on Monday and was valued at $66265 at the time of this report being published.
In the coming days, the crypto community will witness the halving event, which is majorly giving bullish vibes. Any further global war like event will only plummet its chances of crossing the $150,000 barrier.
