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Faced with a scenario with political conflicts and unstable interest rates, it is normal for questions to arise regarding the performance of cryptocurrencies.
Historically, Bitcoin tends to perform very well when there are geopolitical tensions anywhere in the world, as it increases its use in transactions that cannot be traced.
How geopolitical conflicts can affect cryptocurrencies
In unstable times, the quality of “safe haven” presented by some cryptocurrencies, such as Bitcoin, is heavily tested, as investors are looking for safety. Due to the exposure suffered by fiat currencies, digital currencies appear as a good alternative.
Despite Bitcoin’s history, it must be taken into account that it has been widely used in stock trading, being considered a higher risk-oriented growth action.
With all the constants of the current scenario, Bitcoin has become fragile due to the volatility of the US stock market, which in turn, leaves Bitcoin investors safe within all this conflict.
However, the situation will be unsettling, until everything is resolved. Tech and growth stocks will be strangled, the traditional market will be extremely volatile, and there is no way of guessing how digital currencies fared in the short term.
With volatility on the rise, the most obvious is that interest rates will increase as many cryptocurrencies are trying to be regulated by governments in many countries.
But everyone should remain hopeful about the end of these conflicts, as well as the normalization of the entire world economy.