Analysts believe that this is a sign that Russian investors are moving their money out of ruble in response to economic sanctions against Russia for its invasion of Ukraine.
After falling to $36,370 last week, Bitcoin rose to $44,188 on Wednesday. Other top cryptos like ripple, ethereum and solana saw gains of at most 2% or were flat.
The ruble fell to a record low against USD on Monday. dropped to below 1 U.S. Cent and has remained there ever since.
According to Bendik Schei of Arcane Research in Norway, the head of research, investors are “trying get out of the ruble” following its “dramatic devaluation after all the sanction,” CBS MoneyWatch was told.
Schei stated that “under the current market conditions I’m not surprised” to see Russian investors seeking stablecoins. Stablecoins can be seen as less volatile than cryptocurrency because their value is fixed to a currency such as the U.S. Dollar or an asset like gold.
A growing concern among younger investors about government actions that impact currency prices, such as this week’s economic sanctions on Russia, may also be driving up crypto prices.
Michael Oliver, chief analyst at Momentum Structural Analysis, said that there is a whole new generation of investors out there who are doubters about government. “The Ukraine-Russian incident is an example of people asking themselves, “Gee, is that my money safe in that account?”
He said that crypto is a way for investors to “hide money from the government”.
People are also using cryptocurrency for donations to Ukraine. According to blockchain analytics firm Elliptic, more than $22,000,000 worth of cryptocurrency was donated to the Ukrainian government in the conflict.
According to George Harrap, cofounder of Step Finance’s solana cryptocurrency wallet, cryptocurrency can be used to “to donate all over the world with less friction than the existing bank system.”
Sanctions dodge?
David Szakonyi is a George Washington University political science professor who thinks Russian leaders might turn to crypto to support their financial sector. However, he notes that digital currencies will not “serve to replace corporate transactions over the long-term.”
According to the Associated Press, U.S. law enforcement officials and Treasury officials are intensifying their efforts to counter the misuse of crypto in order to evade sanctions. Many crypto exchanges like Coinbase, Coinberry, and KuCoin have stated that they don’t plan to close Russia-based accounts. This is despite being under pressure from the West to remove Russia from global payment networks.
Binance, the largest cryptocurrency exchange in the world, stated last week that it was not planning to freeze accounts of millions of innocent users. “Crypto was created to give people greater financial freedom around the world. It would be a disgrace to unilaterally ban access to crypto by anyone.
Binance said Monday that it would freeze crypto accounts of Russian officials on sanction lists by the U.S.
Another exchange platform, Kraken, won’t close down its Russian accounts unless it is legally required to, Jesse Powell, CEO, said via Tweet.
Powell tweeted, “Our mission at Kraken was to bridge individuals out of the legacy finance system and bring them to the world of cryptocurrency, where arbitrary lines in maps don’t matter anymore, where they don’t have to worry that being caught in broad, random wealth confiscation.”
