As traditional markets collapsed, so did the value of crypto. The cryptocurrency’s price dropped by around 7.5% after Russia declared war on Ukraine. Calling this conflict local is a vast underestimate, as the consequences will be felt far beyond Russia and its democratic neighbor and rock the world’s economies.

A Cold War that seemed to belong buried in the history books might come back with the full force, creating hazardous tensions between the US and Russia, the world’s largest nuclear powers.

Crypto market
Over $242 Million was spent on liquidations by crypto markets as the markets responded to Russian forces moving into Ukraine. Global cryptocurrency markets lost 8.41% in the last 24 hours to $1.59 trillion. With sharp drops, the Asian stock market and US futures markets reacted with shock.

After the attacks and explosions on Ukrainian cities, bitcoin prices plunged 11% to $34,472 in just minutes. It dropped further and fell to $2,314 levels in the last 12 hours. The price of the instrument recovered to $2,380 just an hour later. However, it is still at its lowest point since January 24.

The Russia-Ukraine crisis “could drive prices significantly lower in the short-term,” said for Bloomberg Jonathan Tse, head of trading at crypto platform .co. “However, it could be what’s needed to find a bottom sooner, rather than an ongoing crypto winter for prices slowly grinding lower.”

The West considers it a harsh sanction to cut off Russia’s access to the SWIFT bank network. This could have devastating effects on Russia’s economy and business. This could encourage the adoption of cryptocurrency faster, since Russia is the largest crypto miner. The central bank proposed a ban on crypto in 2022. President Putin opposed it.

World Economy: Impact
World economies that are still trying to cope with the pandemic once in a century will face economic resistance from Russia and Ukraine.

Today’s attack on the Russian Embassy caused stock markets around the world to plummet. This was due to fears of higher inflation. Bloomberg quoted Makhlouf, the head of Irish central bank, that, while it’s too early to estimate the invasion’s effects on the economy, the sanctions against Russia and a possible rise in energy prices are making it more difficult for the European Central bank to counter inflation without hurting the economy.

One of the hardest hit sectors is the energy industry. Since 2014 when the Russian invasion began, oil prices have risen to $100 per barrel for the first times since then. As fears mount about significant disruptions in the world’s energy supply, analysts predict that prices will rise further.

Russia is the world’s third-biggest oil producer and second-biggest producer, ranking among the top energy suppliers to the US and China. Europe receives around 40% of its natural gas from Russia and 25% of its oil directly from Russia. Recent spikes in heating and gas prices have shaken Europe. Natural gas reserves are at a third their capacity. There is still cold weather to come. European leaders have accused Russia’s president, Vladimir Putin, of reducing supplies to gain a political advantage.

US imports 7 percent of petroleum products from Russia and the rest is imported from the US. This makes Russia the country’s third-biggest supplier alongside Saudi Arabia. That is one likely reason why the US in recent days signaled that sanctions against Russia would not be aimed at the country’s energy sector.

Even if sanctions are not specifically directed at the energy market, they could inadvertently affect natural gas and oil exports. Moscow may also respond to this by restricting supply. This could have devastating consequences for Americans, such as a spike in gas prices already very high.

Sanctions against the Nord Stream 2 pipeline, which connects Russia and Western Europe for $11bn, could make the situation worse. Although the consequences are severe, they may not be as serious as those caused by 2020’s coronavirus.

Russia sets its economy ablaze
Russia seems to have just lit its economy on fire, however. Russian-based firms saw their stock prices plunge 50%. Gazprom (MCX), GMK Nornik, Lukoil and NLMK Group, Russia’s largest steelmaker, were among those that suffered. Alrosa Group which specializes is exploration, mining, production, and sale diamonds also lost stock. Multinational corporations are also affected Yandex (NASDAQ) – Provides internet-related products and service and financial services providers, such as VTB Bank, Sberbank and VTB.

Russia, a major transcontinental powerhouse, is an important supplier of oil and gas as well as raw materials. Russia, however, is not a major player in the global economic system, as China, which is a global manufacturing hub and a crucial component of supply chain global supply chains, is. With half the people and fewer natural resources, Italy’s GDP is bigger than Russia’s.

“Russia is incredibly unimportant in the global economy except for oil and gas,”

Jason Furman from Harvard, an economist who advised President Barack Obama, said this to The New York Times.

“It’s basically a big gas station.”

Disruption of food chains
Ukraine is known as the “breadbasket of Europe”, also the world’s largest exporter of seed oils like sunflower and rapeseed. Ukraine exports over 40% of its wheat, corn and other cereals to Africa and the Middle East. Fears exist that food scarcity and rising food prices will lead to social unrest. The grain flow makes up more than 70 percent of Egypt and Turkey’s total wheat imports.

According to recent United Nations reports, the Pandemic caused food prices to rise to their highest levels in over a decade. Russia is the world’s largest supplier of wheat and, together with Ukraine, accounts for nearly a quarter of total global exports. Exports will fall if Ukraine goes to war. Harvest will also be affected.

Impact on the World order
Beyond the threat to global economies, there will also be a moral consequence of this attack as democracy and peace around the globe are in danger.

Violation of other sovereign nations is a grave violation international law. This poses the largest threat to the world’s peace and stability since the cold war.

Europe used to be the arena of two world wars. Although NATO has not yet taken military action in Ukraine, the alliance will continue to support the Baltic neighbors. Many experts believe they may be next targets for Russian expansion, even though both countries are NATO members.

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