We are a living in a very different world than 48 hours ago. With Russia's invasion of Ukraine, the entire geopolitical landscape has drastically changed. If you want to read a book that really predicted this war, and various other dominos that have yet to fall, you must check out Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail by Ray Dalio.
Only the beginning
In my opinion, Russia's invasion is only the first domino to fall in a sequence of events that will upend the current global power structure. While I cannot predict the exact timing of the events, over the next years (and I am leaning more towards months) I think we will look back on the invasion of Ukraine as only the first of many major geopolitical shifts. I doubt Putin would have launched a full on invasion, which has caused the stock market in Russia to sink 33% and the ruble to dramatically fall, without some sort of assurances from other world powers.
Earlier this month, Putin and Jinping met in Beijing, where Putin reaffirmed China's rights to Taiwan and they both criticized the expansion of NATO's power globally. This face to face talk was the first meeting Jinping has had with another country's leader in almost two years.
Thus far, China has refused to criticize Russia's invasion of Ukraine. I personally do not think they will harshly diplomatically attack Russia for these actions. Putin made the first move, and now China patiently awaits to see how the US and NATO will react.
Invasion of Taiwan
Without a doubt, China is seriously considering invading Taiwan right now or in the near future. In the realpolitik international order we now live in, China will see Russia's invasion of Ukraine as a distraction for the West. The chances that the US can successfully fend off invasions of both Ukraine and Taiwan, or come to a diplomatic resolution that reaffirms the current global order upon which it dominates, is incredibly low.
Just three hours ago, Taiwan warned that 9 Chinese aircrafts are in its air defense zone.
While I think that China will wait a bit to see how the West reacts to Russia's invasion, I put the probability of a Chinese invasion of Taiwan at more than 50% in the next two years. From China's perspective, they would have liked to wait a bit longer, since the US is in a decline and they are generally on the rise, but the opportunity Putin presented with his invasion of Ukraine will be hard to pass up.
If China were to invade Taiwan, global political chaos would ensue, as other regional players would capitalize on the fact that the world's police force for the past 75+ years, the United States, would not have the resources to effectively maintain global order.
What this means for crypto is more complicated. The end game of this global conflict is a global world order based around crypto, but how long it takes to play out, and how crypto reacts in the meantime, is an entirely different question. We are just at the beginning of the global disorder phase, and I think the apt year comparison in terms of global conflict is 1914.
Retrospectively, my decision to move into approximately 95% cash has been justified so far. I am not close to considering a redeployment at this time.
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