The war between Ukraine and Russia continues. We are now at the 12th day of this conflict, and it seems likely that a way out of the crisis is not for now.

Announced at the beginning of last week, the cutting of access to SWIFT for several Russian banks should take effect on March 12, 2022. Other American and European companies continue to announce the end of their activities in Russia to show their support for Ukraine.

Vladimir Putin made it clear this weekend that he does not intend to stop until he has completely annexed Ukraine. He told French President Emmanuel Macron that he will get what he wants “either by negotiation or by war”. Putin thus seems determined to go to the end of his madness.

U.S. Secretary of State Anthony Blinken was in Europe this weekend, and he began to explain that America was considering stopping Russian oil imports. He went further to say that America is working with the European Union to get member countries to stop importing Russian gas.

If America can afford such a strategic move, Europe is not ready for it since Russian gas represents more than 40% of its imports. Nevertheless, this hypothesis, which would be just as hard on Russia as on the countries of the European Union, has been enough to make oil prices soar:

Brent crude has approached a high of $140. The markets are currently positioning themselves for a scenario where Russian oil and gas would no longer be available. This is only a hypothesis for the moment since there is no embargo on Russian oil and gas yet.

Nevertheless, it is becoming more and more complex to import them. And this, for practical reasons. Of transport in particular, but also payment. The Western world is therefore preparing for the fact that access to Russian raw materials will soon be cut off.

In addition to this increase in the price of oil, the price of gas is also rising in Europe. The price of wheat of course, but also all metals. Nickel is up, as are zinc, palladium, and aluminum. Copper has just reached its historical record as well:

Boomers are rejoicing and seem to think that they will be able to take revenge on Millennials. They are bolstered by gold, which just broke $2,000 an ounce for the first time since the summer of 2020:

They point to Bitcoin, whose price is between $38K and $39K and which seems to be increasingly correlated to the evolution of the American stock market. According to them, Bitcoin is not a safe haven despite what we have seen in Russia in recent days with an explosion in demand for Bitcoin.

Like Peter Schiff, these gold bugs are getting too excited too quickly. They would do well to remember what happened the last time the ounce of gold exceeded $2,000 in the summer of 2020. The price of Bitcoin was stagnating between $9K and $10K, and some questioned its role as a safe haven.

Then came the fall of 2020 with the start of a memorable Bull Market that pushed the price of Bitcoin to a new ATH of $64K in April 2021. This ATH was then beaten in November 2021 to $69K. I believe this is the same scenario we are heading towards in the coming weeks and months. Bitcoin is still in the accumulation phase, but the market setup we have will eventually pay off.

Unlike many Bearish people, I remain convinced that Bitcoin will soon enter the impulse wave 5 described in Elliott's wave theory. I could be wrong, of course, but it will be several months before we can learn anything about the role of Bitcoin in a crisis like the one between Ukraine and Russia.

Final Thoughts

Whatever happens, you should expect this to have a major impact on the economy, with inflation continuing. Announced as temporary, this inflation has now reached the status of sustainable in the eyes of Jerome Powell. Before long, he will open his eyes and call it galloping.

As the purchasing power of households will be severely impacted by this war in Ukraine, the Fed and other central banks will be faced with a dilemma and will have to play a balancing act to fight inflation while avoiding that economic growth collapses and that the situation of the severe stagflation of the '70s is repeated in America.

We will probably know more after the next Fed FOMC meeting in mid-March. In the meantime, patience is required. As always, with Bitcoin.

Some reading

• Elliott Wave Theory in Action – What if Bitcoin Is on the Verge of the Impulse Wave 5? An interesting idea that would confirm that $100K is in store for Bitcoin in the coming months.

• The Spectre of the Severe Stagflation of the 1970s Resurfaces in America. Some people are beginning to remember the radical method used by Paul Volcker.

• This Russian Businessman Puts a Price on Vladimir Putin’s Head for 1 Million Dollars. What if the overthrow of Vladimir Putin came from within Russia?

• Here’s Why I Still Think Bitcoin Will Hit $100K (at Least) in 2022. Look at the drivers of the market, and you'll understand why the central banks' game is far from over.

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