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GÜMÜŞ BAHAR, Md. (AP) — Bitcoin prices soared as investors again saw the volatile cryptocurrency as a safe haven for their money, and Russians and Ukrainians sought alternatives to their country’s financial institutions.
After initially dropping to around $34,000 Russiamove into Ukraine Last week, bitcoin rallied about 10% more on Monday and is now up more than 25% last week to $43,900 on Wednesday afternoon. Other cryptocurrencies also rose.
Russians are trading their rapidly depreciating rubles for bitcoin to mitigate the impact of economic sanctions imposed by the international community for their country’s attack on Russia. Ukraine. The Ukrainian government has limited its citizens’ ability to conduct electronic funds transactions, so Ukrainians are also turning to bitcoin and other cryptocurrencies. They also buy stablecoins whose values are pegged to the US dollar.
Prior to the Russian invasion, bitcoin traded similarly to other riskier assets such as technology stocks. Investors expect the Federal Reserve to begin raising interest rates soon in response to high inflation. They withdrew money from more speculative investments like Bitcoin and bought bank shares in other industries that had been performing well as rates rose.
After the invasion, this changed when Western countries responded with a series of steps that limited their offensive capabilities. Russia‘s government and the country’s oligarchs are accessing financial systems. There are spillover effects for these moves RussiaCitizens of Turkey lined up at banks and ATMs to withdraw money.
Blockchain data and analytics firm Coin Metrics says bitcoin trading volume for both the ruble and the Ukrainian hryvnia has increased in recent days, but this type of trade still represents only a small fraction of the total volume. Translation: investors see bitcoin and other cryptocurrencies as a good place to re-store assets.
Kyle Waters, a research analyst at Coin Metrics, said crypto trade data confirms that recent geopolitical events have “more generally” increased demand for cryptocurrency that can be transferred anywhere without the need for a third party.
“This could apply to anyone and certainly includes ordinary Russian and Ukrainian citizens trying to escape the depreciating local currency,” Waters said.
Some analysts and media reports suggested that Russian oligarchs could use cryptocurrencies to evade sanctions. On Wednesday, the Justice Department said it has formed a task force that will, among other things, seek to thwart efforts to use cryptocurrency to circumvent sanctions.
Some analysts suggest that this bitcoin surge may already be nearing the ceiling as energy prices rise in Russia.Ukraine conflict intensifies. Oil rose to $111 a barrel Wednesday, the highest in more than a decade. Bitcoin mining, where computers are used to verify bitcoin transactions, consumes enormous amounts of energy.
“Bitcoin has performed well but fatigue from this rally will likely subside as rising energy costs will likely impact some mining abroad,” Edward Moya of Oanda said in a market summary report.
In addition to both increased regional and wider crypto market activity, millions of dollars worth of cryptocurrencies have been donated. Ukraine since the invasion.
Elliptic, a firm that tracks cryptocurrency transactions, said that $33.8 million worth of digital currency has been donated. Ukrainegovernment and non-governmental organizations since its inception. Russia‘s invasion, almost a third on Tuesday.
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