AssetsJan 07, 2023

How will Bitcoin behave during World War III?

Will the oldest cryptocurrency survive the great armed conflict?

Recent years have taught us one thing - expect the unexpected. Although today many people downplay the threat of a war between the US and China, it is worth considering how Bitcoin can behave in such conditions.

Will World War III become a reality?

Tensions between China and the US have been going on for many years. More than a decade ago, Washington decided on the so-called Pacific Pivot - redirecting its attention to the Pacific region, at the expense of, for example, Europe.

Since then, from time to time we learn about further political provocations, whether from the Chinese or the Americans (e.g. Nancy Pelosi's arrival in Taiwan). Although so far they have not led to open warfare, as history teaches us, hot conflicts between superpowers can break out at the least expected moments (see World War I).

The flashpoint between the US and China could be Taiwan - key to controlling the region - or the Strait of Malacca - extremely important in the context of world trade.

War breaks out, what happens to Bitcoin?

Now suppose that a US-China armed conflict breaks out. In practice, this means World War III. How will Bitcoin behave in such conditions? Let us remember that Bitcoin, like any cryptocurrency, is considered a risky asset. That is why it is worth checking how stocks behaved on the American stock market during World War II. These, in turn, lost their value sharply.

Wall Street stocks started to rise when France and Great Britain declared war on the Third Reich, but as soon as the Allies began to lose, the American stock market began to fall sharply. The collapse in the financial market lasted until the US with its allies began to win against the Axis Powers.

We do not know how a potential US-China conflict would play out, but experts believe that the Americans would lose the first stage of it. The later ones are not certain either (issues of logistics and China's extensive anti-access systems make the latter country a much more difficult rival than, for example, the Third Reich).

So we can assume that Bitcoin would start to fall in value along with stocks on Wall Street (assuming US failures). However, as Lucas Komarnicki, CEO of Tytanid, emphasizes, the matter is not as certain as in the case of shares. This is indicated by the specific nature of Bitcoin.

– There is a glimmer of hope that even in such a tragic scenario, digital assets could be strengthened. They facilitate the transport of assets - it is easier to flee from a war-threatened area with a piece of paper with a private key than with a gold bar, not to mention a suitcase of money (a potential run on banks during the outbreak of war will reveal the weaknesses of the current banking system), adds Lucas Komarnicki.