This article is translated from FTX founder Samuel Bankman Fried Twitter, original title"Some thoughts on cryptocurrencies, Ukraine and stocks"

Let me start by stating that this is not financial advice, wars can happen these days and it is cruel to the world. (don't get overly concerned) damn the price, get out there and do something nice for others, that's what the world really needs.

With the S&P 500 down about 4% and BTC down about 8% over the past day, it's easy to see why. Stocks are falling logically, war is negative. What role should Bitcoin play here?

On the one hand, if the world gets worse, people will have less disposable free cash, and someone will sell assets such as bitcoin, stocks, etc. for war spending. On the other hand, this could destabilize Eastern European currencies, and indeed Eastern European financial systems. This means they may be looking for alternatives. If you were in Ukraine right now, where would you keep your money?

There's a lot of debate about where bitcoin is headed, I can't say if I guessed it would go down, but why is bitcoin down so violently?

We assume that there are two typical types of investors in the world: fundamental investors and algorithmic followers.

Fundamental investors focus on big trends, they are not sure where BTC/USD will go next; algorithmic followers look at the data: historically, what is the trend?

Over the past year, there has been a very high correlation between cryptocurrencies and stocks. The main reason is monetary policy: changes in inflation expectations and interest rates change the dollar and other fiat currencies. Cryptocurrencies and stocks have risen sharply against the U.S. dollar because of rising inflation.

So the algo follower looks at the data and based on the fact that BTC has an 80% correlation with the S&P 500 and a beta of 4 (that is, if the S&P 500 goes up 1%, BTC goes up 4%) Decide.

Then there was a war, and fundamental investors were neutral, but based on historical research, algorithmic investors thought the S&P 500 would fall by 4%, so BTC was expected to fall by 4*4%=16%.

The market is always a long-short game. Fundamental investors buy and algorithmic investors sell. On the Internet, the closing price of BTC is between the two, and it fell by 8% on the day.

So who is right? I have no idea.

Maybe the algo investors are right, maybe we "think" it has something to do with the financial system, but in reality the main effect is a lot of assets being dumped to fund wars, or maybe their judgment is based on a change in monetary policy, but it's not the currency policy initiatives.

So BTC fell 8%, half of the 16% predicted by algorithmic investors. Their model is updated: a new cycle begins.

Or maybe the real impact has nothing to do with any of the above, and liquidity is what matters.

If you're a risk-averse investor, maybe you're selling everything you own because who knows what will happen. So we need to think: Who is buying these highly volatile assets in an illiquid market?

Anything is possible, we are in a new system compared to the past year and a half, everything is still on the sidelines.

Finally, again: to do something good for others is what the world really needs today.