The impact of geopolitics on cryptocurrencies is undeniable, but how exactly do crypto markets react differently to various types of geopolitical events?

Regional Conflicts vs. Global Crises:
Regional conflicts usually have a more localized impact on crypto markets, an example being the Russian invasion of Ukraine when crypto trading volumes in both countries increased significantly as people looked to safeguard their assets.

On the other hand, the COVID-19 global pandemic led to significant growth in Bitcoin’s price. Investors worldwide sought alternative assets in the midst of global economic instability. 

Regulatory Changes vs. Economic Sanctions:
Regulatory changes driven by geopolitical events can have long-lasting effects such as prolonged drops in prices and trade volumes, whereas economic sanctions can result in an uptake of crypto adoption in affected countries as individuals look to decentralized assets. For example, U.S. sanctions on Iran resulted in a notable increase in Bitcoin trading volumes in Iran.

Military Conflicts vs. Political Instability:
Military conflicts tend to cause more immediate but potentially shorter-term reactions. The recent conflict in the Middle East in early October led to Bitcoin dropping to $60.5k - by the end of the month it had risen to $72k.

Political instability can lead to more varied reactions such as an increased interest in crypto as an alternative investment asset, or a sell-off as investors lean towards more traditional assets.

The descriptions provided above are all based on publicly available information, and cannot be considered as financial advice or encouragement to invest. Sources of information used in this post include Finance Magnates and Taylor & Francis Online. All transactions involving digital assets involve certain risks, which you should familiarize yourself with prior to any investment.