Russia Ukraine's war impacts already fall upon the International stock and crypto market. People panicked, and as usual, the market crashed. I want to discuss what will happen to the market during this war and after. But before knowing that, we have to dive into the main reason why Russia is attacking Ukraine! Honestly, I don't know all the details, and I don't want to. I will just share the current and basic backgrounds.
We all know Russia used to be the Soviet Union. In 1991 Soviet Union collapsed due to many reasons like political, economic, military factors, and so on!
Russia's borders post-Soviet Union collapse in 1991 Source
From this collapse, 50 independent countries have been born, and the biggest one is Russia! There are some of the smallest countries also like Georgia, Latvia, Estonia, etc. Since then, some of these smallest countries like Estonia, Latvia, Slovenia are joining NATO.
We all know what NATO is. For those who don't want to search on Google - NATO is The North Atlantic Treaty Organization that the USA and European countries created after World War 2. It was created to protect listed countries from the USSR - Union of Soviet Socialist Republics!
If someone attacks on one ally, they consider it an attack on all allies. It's more like if someone beats your brother, you call out your friends and go to beat your enemies.
So slowly, more and more USSR countries started joining NATO. And most recently, Ukraine also wanted to join NATO. And when Russia saw this they were like - "What the hell are you doing? I will beat you if you dare to join our enemies!"
That's basically what's happening right now! Since USSR countries started joining NATO, Russia wasn't happy! Because in 1990, NATO had promised that they wouldn't expand to the eastern direction.
But guess what? They expanded!
Did NATO really promised that? You can found out more from this link!
In 2014, Russia took over Crimea, which was once a part of Ukraine. And Russia is afraid that if Ukraine joins NATO, they will help Ukraine to take back Crimea. So to avoid that, Russia is threatening to take over Ukraine if they dare to join NATO. All these led to the current war situation. Of course, the situation is more complicated than what I said. But that's the trim summary for the people who have no idea about this war!
Since then Russia started moving armies around Ukraine. And Ukraine's president predicted that there would be an attack on February 16, but it didn't happen. Instead, on that day, Russia announced they would withdraw armies. But the market has already started collapsing since the tension arises. And Russia added more troops instead of withdrawing.
We all know the aftermath! Russia had already entered Ukraine, and war had started. And Ukraine is not getting help from any neighboring countries and NATO! As a result, Russia can take over the whole of Ukraine anytime!
So here's the question that everyone is asking now - how this war will affect the market? Whether it's the crypto market or stock market!
We all know the basic pattern of news trading.
Bad News = Red Market
Good News = Green Market
And the same things happened here. It's a piece of bad news, and the market crashed so badly. But if you look at the short term, when the Ukrainian president said Russia would attack on February 16, the market went down. And when Russia said they would withdraw the troops, the market went up. It's all about good news and bad news.
When World War One broke out in 1914, the price of Dow Jones went down by 30%. But by 1917, when the war was still ongoing, the market was like - This is fine! And it went up high, like 80%! By the time the war ended in 1918, the market still gave almost 50% return since the start of the war! And it went all time high in 1920!
In 1939, at the start of World War Two, the market was calm and didn't react much! And then, when Pearl Harbor was attacked in 1941, investors were like - Sell everything! Doomsday has come! And the same pattern happened like World War 1; the market went back up in the middle of the war! By the time the war ended, the market had given almost 50% returns.
As you can see, there's a pattern happening over and over again. When a war starts, the market usually reacts badly because that's uncertainty! But after a while, everyone gets used to the war! Everything starts going up again.
For example Vietnam War! At the starts market crashed, then started going up.
Afghanistan war, which lasted like over 20 years! At the start a small crashed happened! And then the market went up by a lot! By the way, I am showing all data from Dow Jones here. But a similar happened to almost all of the stocks!
Geopolical event reaction on Market Source
Check this out! When there's a market shock, events like US terrorist attacks, North Korea attacks South Korea, Iranian General killed in an airstrike, the price always goes down! But the average drawdown of all of these like only -5%, which is your average day of holding Tesla and Bitcoin! And after a while market always recovered. If you average, the market always recovered within 47 days.
Not bad, right?
Please also note that, during those wars, the market was only not affected by the war! There were so many other factors too!
So, the people who actually check all these data and evaluate, never sell at low and wait for a good time! But paper hand people are going to start panicking and selling all the time! They are the reason why the market always collapses during any bad news. Also, big institutions want them to panic to fill their bags at low prices.
So, now you know when you should hold and when you can sell. Expert traders always save some money for this day to buy the dip like this. But noob like me never sees this coming! Don't be like me!
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