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SM (Ed.20) Sanctions & War raise importance of Borderless Censorship Resistant tech

SM (Ed.20) Sanctions & War raise importance of Borderless Censorship Resistant tech

March 01, 2022

Friends and associates,

I will avoid going into detail on Russia-Ukraine as I am sure you have heard enough about it from other sources. Clearly its important to assess the impact on crypto markets though.

. Who knows if the Russian central bank is actually purchasing bitcoin (probably not), but Russia and Ukrainian citizens alike saw the power of censorship resistant money during February.

  • 1) For many Ukrainian's who fled their country, crypto was the only pool of capital they were able to access once they crossed the border.

  • 2) Crypto networks have been a major source of funding for Ukrainian's resisting the Russian invasion. The bitcoin and crypto community have donated millions of dollars to the cause.

  • 3) Bitcoin served as a incredible protection for Russians who saw the value of the RUB fall 37% during Feb on account of their reckless leader.

I know I sound like a broken record player sometimes because everything is a potential bitcoin catalyst to me. But that is just the reality of the world that we live in. The monetary system is archaic, it is decaying in front of our eyes and bitcoin is a potential solution so use-cases for bitcoin are everywhere!

I steer away from economic, political or humanitarian comments re Ukraine so let me just clarify quickly: war is tragic, devastating and my heart goes out to all of those in Ukraine and Russia that are effected by this unnecessary conflict. Whatever your opinion on that matter, Russians and Ukrainian’s need bitcoin more than ever and the evidence for this view is clear in Feb 2022

Pulling back the lens from Ukraine, macro conditions remain tough so while the short-term outlook for bitcoin is strong, I still think that further headwinds cannot be ruled out this year. We are not seeing broad-based demand in terms of new users and on-chain transactions. Plenty selling pressure could emerge in the high $40Ks. ETH could experience a nice relief rally in response to BTC, but I do not think this is the time for a multi-month high-beta rally yet.

Conclusions

  • War in Ukraine provides further evidence of bitcoin use-cases

  • Prepare for a potential PR backlash if Russian oligarchs evaded sanctions

  • Risk appetite pressured in Feb but stretched & recovery possible in short-term

  • Trad-fi macro should conditions continue to deteriorate through 2022

  • Bitcoin fundamentals are strong, long-term holders firm

  • Institutional demand confirmed but broad-based demand still weak

  • Gold recovers but underperforming BTC

  • High beta relief rally expected to be temporary

  • Cyclical conditions advise patience in 2022

Have a great month. See you in April.