The war in Ukraine may partially affect the growth of bitcoin

On March 2, BitMEX co-founder Arthur Hayes published an essay describing «realistic potential situations» that could lead to a sharp rise in oil prices and, as a result, a lightning-fast rise in the BTC exchange rate. In his Curve Ball blog, Hayes described possible scenarios that could lead to oil shortages around the world, given the current geopolitical situation.

For example, Iran could escalate its conflict with Israel and Saudi Arabia by blocking the Strait of Hormuz, one of the most popular channels for the supply of black gold between the Persian and Omani Gulfs. Then the largest oil distributors (Saudi Arabia, the occupying country of Russia, etc.) will significantly reduce production. Hayes also suggests that the most important oil and gas infrastructure could be shut down through «deliberate sabotage.»

The Russian-Ukrainian war plays a role in this scenario. Given the EU sanctions targeting the terrorist state, Russia is unable to supply its oil to the countries of the civilized world, and the price of black gold has already risen significantly.

As a net importer of oil, the United States is likely to start drilling its own untapped reserves of the mineral — all to lower prices. «The only way the US will be able to get more oil domestically is to encourage domestic companies to increase capital expenditures, and that will require credit,» Hayes wrote. «I believe that in this situation, the Fed will have to lower interest rates and loosen financial conditions.»

Lower interest rates are recognized as a positive factor for both stocks and cryptocurrencies. In November 2021, bitcoin soared to $ 69,000, when the Fed’s discount rate was only 0.25%. However, in just a year, the BTC fell to $ 15,500, as the Fed kept raising the rate. «As the amount of fiat money grows along with inflation for ordinary people around the world, fixed supply monetary instruments like BTC are by definition becoming more valuable in fiat money,» Hayes explained.

The BitMEX co-founder believes that rising oil prices could also put additional strain on the BTC mining industry, which has only recently returned to average profit margins thanks to the rising price of the flagship crypto asset.