Visual presentation of bitcoin.
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Bitcoin jumped 13 percent on Tuesday, continuing its sharp recovery as Russia’s attack on Ukraine continues and the United States tightens sanctions.
The cryptocurrency rose more than 13% to $ 43,500.16 at 3:03 a.m. ET after peaking at $ 44,165.90 in the last 24 hours, according to CoinDesk. This rally comes after cryptocurrency prices fell last week as risky assets such as shares sold off after Russia’s invasion of Ukraine.
Ether rose nearly 11% to $ 2,922.86.
Over the years, Bitcoin proponents have touted the cryptocurrency as “digital gold,” an asset that provides a safe haven for investors in times of turmoil or even as a potential hedge against inflation. But bitcoin did not present itself in this way. Instead, it is more related to the movement of stock prices, even as inflation continues to peak for many years and military conflict ensues. This case of bitcoin as digital gold has crashed in recent weeks.
Vijay Ayyar, vice president of corporate development and international development at the Luno cryptocurrency exchange, said that could change.
“Bitcoin and cryptocurrencies are likely to have their turning point amid global uncertainty and tensions over the Russia-Ukraine crisis,” Ayar told CNBC.
“Crypto is separated from traditional markets and can be clearly seen in the performance.”
People are also donating cryptocurrency to the Ukrainian military, “proving that crypto is a technology that cannot be ignored,” Ayar added.
He also said that the bottom for bitcoin is already being formed as the war begins.
Michael Rinko, a contributor to AscendEx, told CNBC on Monday that $ 38,000 was a key level for bitcoin.
“More people bought at $ 38,000 than at any other level above or below for a good margin,” he said.
Additional sanctions
The bitcoin rally came when the United States imposed additional sanctions on Russia. Washington has turned to Russia’s central bank, effectively banning Americans from doing any business with the bank and freezing its assets in the United States.
This comes in addition to sanctions against Russia’s oligarchs and public debt, as well as actions aimed at cutting the country off from the global financial system.
There is debate over whether bitcoin, which is not owned or issued by a single central bank, can be used by Russia to evade sanctions. But the amount of money Russia will have to convert to and from bitcoin may be too much, according to Ari Redboard, head of legal and government affairs at TRM Labs.
“You will see Russia trying to bypass the US financial system by turning to cryptocurrency. “I think the problem is that liquidity just doesn’t exist,” Redboard told CNBC’s Squawk Box Asia.
On Sunday, Mikhail Fedorov, Ukraine’s deputy prime minister, asked major cryptocurrency exchanges to block the addresses of Russian consumers.
Binance, the world’s largest stock exchange, said it would freeze the accounts of all Russians on the sanctions list, but would not “unilaterally” block all Russian users’ accounts.
Other cryptocurrency exchanges have taken a similar position.
– CNBC’s Tanya Machel contributed to this report.