Russia’s invasion of Ukraine has sparked demand for cryptocurrencies in both countries, which has helped raise the price of bitcoin.
Bitcoin is trading higher against the Ukrainian hryvnia on a number of exchanges, both globally and locally, a sign of high demand. At Binance, the world’s largest stock exchange, bitcoin traded for the equivalent of $ 46,646 in bracelets. On the kuna, the largest stock exchange in Ukraine, it was $ 46,614 and traded up to $ 51,240.
Bitcoin was recently traded at $ 44,178 in US markets, up 16 percent from Monday morning, according to CoinDesk.
Binance has seen a surge in bitcoin trade in exchange for rubles since just before the Russian invasion. Between February 20 and 28, about 1,792 bitcoins swapped hands in the ruble / bitcoin pair, up from just 522 in the nine days before, according to Binance.
Western sanctions have effectively cut Russia off from the global financial network, and Ukraine has imposed tight capital controls.
Crypto is popular in Ukraine and Russia. Ukraine ranked fourth in the global adoption index created by the analytical firm Chainalysis. A report by the Russian government estimates that there are more than 12 million cryptocurrency portfolios held by Russian citizens for about 2 trillion rubles, or about $ 20 billion.
“The situation in Ukraine has exposed the value of bitcoin as an alternative money network,” said Timo Lehes, co-founder of the Swarm Markets trading platform.
The reversal of bitcoin-specific demand is a break from its recent model of trading on risky assets such as technology stocks.
The Bitcoin rally this week erased the losses for February. Most other cryptocurrencies were also higher. The ether increased by 4.7%. XRP increased by 0.7%. Avalanche rose 3.3 percent and Cardano rose 0.9 percent.
On Tuesday, the Nasdaq Composite Technology Index fell 1.2%.
Because bitcoin trades 24 hours a day, in some cases it runs risky assets, not just follows.
The Russians are queuing up to use ATMs as ordinary citizens begin to feel the impact of Western allies’ sanctions on the country following Moscow’s invasion of Ukraine. Meanwhile, the Moscow Stock Exchange remained closed on Tuesday. Photo: AP Photo / Dmitry Lovetsky
Last Wednesday, when Russian President Vladimir Putin announced his invasion of Ukraine, US stock markets were closed. Bitcoin fell about 6% overnight, then rose 13%. On Thursday, US stocks closed slightly higher after a day of hectic trading.
Bitcoin fell by almost 9% from the afternoon of Friday, February 18, to the evening of Monday, February 21, amid news of the deteriorating crisis in Ukraine. US stock markets, closed on Monday due to a holiday, did not have the opportunity to respond to the news until Tuesday. When they did, all major indices lost more than 1%.
Attention has also been drawn to cryptocurrencies for their potential as a way out for Russians trying to circumvent sanctions. While the cryptocurrencies themselves were not part of the sanctions, the White House is considering adding them.
On Twitter on Sunday morning, Mikhail Fedorov, Ukraine’s deputy prime minister, called for cryptocurrency exchanges to block Russian accounts. “It is crucial to freeze not only the addresses of Russian and Belarusian politicians, but also to sabotage ordinary consumers.
Mr Fedorov of Ukraine did not specify whether the request was personal or on behalf of the government. An attempt to contact him was unsuccessful.
SHARE YOUR THOUGHTS
What could be the effect of blocking Russians from crypto exchanges? Join the conversation below.
Crypto exchanges have largely opposed the introduction of any voluntary restrictions in Russia.
Binance said it would not make a total ban, but that it was taking action against Western sanctions. Exchange Coinbase,
Kraken and KuCoin also said they would not freeze Russian accounts without sanctions or legal requirements.
“We are trying our best to protect human rights and asset security,” said KuCoin CEO Johnny Liu. “Actions that increase tensions to infringe on the rights of innocent people should not be encouraged.”
Crypto exchanges regularly execute court orders and legal requests for data about their users, as well as regulated banks. There was no hint that the Ukrainian government, alone or in concert, would take legal steps to demand the blocking of Russian consumers.
Technically, exchanges have improved their infrastructure over the past few years and could apply these sanctions if necessary, said Jack MacDonald, CEO of PolySign, which produces software to store crypto assets for exchanges and other trustees.
Binance, led by CEO Changpen Zhao, saw a jump in bitcoin trading in exchange for rubles.
photo:
DARIN ZAMIT LUPE / Reuters
Stock exchanges have the ability to monitor accounts and transactions and even know where deposits come from. Funds from known hacks, for example, can and are blacklisted.
“It will be difficult for Russia to avoid sanctions using bitcoin,” Mr MacDonald said.
However, blocked users will still be able to find unregulated exchanges or even more non-transparent markets for buying and selling their cryptocurrencies.
Some of the Western sanctions included disrupting Russia’s Swift network, a banking consortium that processes millions of daily payment instructions.
Western sanctions and restrictions “strengthen the argument for blockchain products that will compete with the SWIFT network,” said Oanda analyst Edward Moya.
Investors are buying now, he said, in anticipation of an investment wave based on the construction of these products.
Write to Paul Vinya at [email protected]
Copyright © 2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8