FTX CEO Predicts Bitcoin Market Outlook Amid Ukraine Crisis

Bitcoin’s correlation with the U.S. stock market may be one reason for its current decline, but currency instability in Eastern Europe could propel BTC as a hedge against a “crisis.”

The world woke up in a "sea of red" that didn't just describe the financial markets of the day, as Russia declared war on Ukraine earlier on Thursday.

Traditional financial markets and cryptocurrency markets have been sliding in a bear market for the past week and saw a massive drop early Thursday. Most stocks fell more than 5%, except for crude that jumped to an eight-year high above $100.

The Russian incursion sparked a bear market on Thursday that led to a $500 billion sell-off in the crypto market, with most cryptocurrencies falling below key support to trade at three-month lows. The crypto market cap saw a 10% drop in early Asian trading hours, falling below the $1.5 trillion mark.

Bitcoin (BTC) is considered an inflation hedge, and many expect its price to show resilience in times of crisis. However, Sam Bankman-Fried, CEO of global derivatives and spot cryptocurrency exchange FTX, believes that BTC’s drop is not unexpected.

“4) Stocks fall for a reason. Wartime is never good.

What is BTC for?

On the one hand, if the world gets worse, people have less discretionary cash.

Basically, sell BTC, but also assets like stocks, to pay for the war. "

— SBF (@SBF_FTX) February 24, 2022

Bank man-Fried tweeted in response to market conditions that the war has created a cash crunch in the market, leading to a sell-off in traditional as well as cryptocurrency markets. BTC’s price drop is also due to its growing correlation with the Nasdaq and the S&P 500, which recently reached a two-year high.

Bankman-Fried noted the currency instability in Eastern Europe, suggesting that investors in Eastern Europe may look for alternative currencies due to the Ukrainian invasion, which could make BTC an obvious and obvious choice.

"5) On the other hand, this could destabilize Eastern European currencies.

And, more broadly, for the financial system of Eastern Europe.

This means they may be looking for alternatives.

If you were in Ukraine now, where would you put your money? "

— SBF (@SBF_FTX) February 24, 2022

Bankman-Fried divides investor mindsets into two types: fundamental and algorithmic. Fundamental investors look at market conditions and sentiment, while algorithmic investors prefer data, he explained.

The fundamentals of the market suggest buying opportunities, as BTC is a crisis hedge, while algorithmic investors are more inclined to sell based on the data and BTC’s correlation with the stock market.

According to this theory, the push and pull between fundamental investors and algorithmic investors has led to the current stalemate in the Bitcoin market.

“11) The forces of the two sides are wrestling, fundamental investors are buying, and algorithmic investors are selling; in terms of net value, BTC eventually fell between the two, down 8% on the day.