Geopolitical Risk and Its Impact on the Cryptocurrency Market during the Russian-Ukrainian Crisis

Joksimović Marijana (Full Time Professor. Senior Research Associate. Alfa BK University, Faculty of Finance, Banking and Audit, Belgrade, Serbia), joksimovicmarijana80@gmail.com

This study examines the relationship between geopolitical risk and the behaviour of the cryptocurrency market during the Russian-Ukrainian crisis. It focuses on major cryptocurrencies. Using an event-based descriptive approach, the study analyses price volatility and trading volumes of Bitcoin (BTC), Ethereum (ETH), and the stablecoin Tether (USDT), as well as investor behaviour during key geopolitical events from Q4 2021 to Q2 2023. Data were collected from public sources, harmonised across exchanges, and cleaned for missing values and anomalies to ensure reliability. Results show that major events, such as Russia’s invasion and subsequent sanctions, triggered sharp short-term fluctuations in BTC and ETH prices, as well as increased volatility and trading activity. USDT remained price-stable but saw significant surges in trading volume, highlighting its role as a temporary safe haven during market uncertainty. These patterns illustrate a dual role of cryptocurrencies during crises: volatile coins react strongly to shocks, while stablecoins provide liquidity and preserve value. The study demonstrates that cryptocurrencies are sensitive to geopolitical developments despite decentralisation. The findings underscore the need for monitoring digital asset markets during political and economic turmoil and offer insights for investors, regulators, and policymakers on the evolving role of cryptocurrencies and stablecoins in global finance. This descriptive analysis does not infer causality but provides a clear and replicable overview of market responses to geopolitical risk.

Keywords: Geopolitical Risk, Cryptocurrency Market, Russian-Ukrainian Crisis, Bitcoin, Financial Sanctions, Balkan Region, Regulatory Response and Market Volatility.