An investigation into the relationship between cryptocurrency active addresses and prices during major geopolitical conflicts

Abstract

Our study, set against the backdrop of the ongoing Russia-Ukraine war, Hamas-Israel conflict and fintech advancements, investigates the implications of Bitcoin (BTC), Ethereum (ETH), and Tether (USDT)'s active addresses on BTC prices. In doing this, we employ a combination of traditional time series VAR model and machine learning BPNN model during the geopolitical conflict period. Our findings indicate that BTC and ETH prices often move in tandem ahead of geopolitical conflicts. Investors aiming to boost their income choose to buy lower-priced ETH, leading to a rise in the number of active ETH addresses, positively correlated with BTC's price. However, during geopolitical conflicts, this relationship shifts. The number of active USDT addresses is a significant factor influencing BTC price. Consequently, when confronted with a steep decline in BTC prices, investors tend to convert BTC into the USDT stablecoin to avert losses.