Cryptocurrencies are touted as resilient during wars, but bitcoin is falling since Hamas attacked Israel

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Welcome back to Distributed Ledger. This is Frances Yue, reporter at MarketWatch.

has traded lower since the Hamas militant group carried out an unprecedented attack on Israel on Oct. 7. That’s challenging a long-held industry view of crypto as a nonsovereign store of value, especially useful during wars and natural disasters. 

The retreat of bitcoin comes in contrast with its rally after Russia invaded Ukraine in February, 2022. 

I caught up with a few industry participants to find out why. 

Find me on Twitter at @FrancesYue_ to share any thoughts on crypto or this newsletter.

Bitcoin’s role in wars

Bitcoin’s price is primarily dominated by macroeconomic conditions at the moment, with the global economy facing risks of a recession, according to Alex Tapscott, head of digital assets and portfolio manager at Ninepoint Partners.

“I think the fact that there’s a war in the Middle East and a war in Europe, and heightened tensions around the world does suggest to me that there’s a lot of risk in the market,” Tapscott said. 

It also didn’t help bitcoin’s reputation that a Wall Street Journal article reported three militant groups, Hamas, Palestinian Islamic Jihad and their Lebanese ally Hezbollah, received large amounts of funds through crypto, during the year leading up to the attacks on Israel, noted Nicholas Colas, co-founder at DataTrek. 

All three militant groups have been designated foreign terrorist organizations by the U.S. government and are subject to sanctions by the Treasury department. 

“It is too early to tell how much reputational damage has been done to the [digital asset] space, or what the longer run regulatory repercussions will be,” Colas wrote in a Thursday note. 

“At the very least, however, news that terror organizations use virtual currencies at scale will only harden views that this industry needs a lot more regulation before investment products like ETFs can be released to the public. We would certainly not be adding to virtual currency holdings on the recent weakness. This story will take time to play out,” Colas wrote. 

For the Ukraine-Russia war, crypto has been used in fundraising for both parties. 

SBF trial 

Caroline Ellison, former chief executive at crypto exchange FTX’s sister hedge fund Alameda Research, has been testifying in FTX founder Sam Bankman-Fried’s fraud trial, which kicked off last week. Ellison, who has also been dating Bankman-Fried on and off for two years, is a star witness for the trial. 

Ellison told the jurors that Bankman-Fried ordered her and others to commit criminally fraudulent acts, according to reports by the Wall Street Journal. 

She said she and Bankman-Fried knew for months about Alameda’s alarming financial conditions and worried whether they could keep it from collapsing. She said the final days of FTX was “the worst week of my life,” according to the Wall Street Journal.

Crypto in a snap

lost 3.4% in the past seven days and was trading at around $26,720 on Thursday, according to CoinDesk data. Ether
fell 5.3% during the same period at around $1,531.


  • Israel freezes crypto accounts seeking Hamas donations, police say (Reuters)

  • Binance Founder’s $1 Billion Plan to Save Crypto Quietly Fizzled Out (Bloomberg)

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