Cryptocurrencies Are Playing Roles In The Battle; And The Battle Is Impacting The Prices
This is a follow-up piece to Finance writer Jesús Cedeño‘s analysis of where cryptocurrencies are today. All viewpoints are his own do not necessarily reflect the views and positions of the Global Economic Report. Neither the writer nor Mohr Media’s GER website are responsible for readers’ investment decisions.
April 11, 2022—It’s no coincidence that Bitcoin prices have shown an upward trend since February 25th.
Today, we cannot talk about cryptocurrencies without looking at the Russia-Ukraine war. It’s a factor that is influencing not only crypto’s value, but also the way governments all over the world are using and reacting to the conflict.
Russia’s Invasion
After Russia invaded Ukraine on February 24th, the United States and other allied countries have responded by implementing economic sanctions aimed at limiting Russia’s capacity to finance the war as well as their own domestic issues. As a result, the Ruble’s value plummeted to record lows.
Since it all started, many people expressed concerns that the Russian government might try to use cryptocurrencies to evade sanctions. They noted the marked increase in Ruble-to-crypto transactions since February 24th, with a value of tens of millions of dollars each day.
Sanctions Evasion? Some Say ‘No’
Notably, cryptocurrencies are playing a role in the conflict.
Some crypto watchers say it’s very unlikely that cryptocurrencies will be used by the government to evade sanctions. For starters, crypto exchanges like Binance and Coinbase have been willing to monitor and limit transactions on wallets linked to members of the Russian government. Second, there are some limitations due to the technical nature of blockchains themselves. And, finally, there simply isn’t enough liquidity in the crypto market to make large-scale evasion of sanctions possible.
So what about those tens of millions of dollars’ worth of Rubles being exchanged for crypto every day? While it may sound impressive, that amount is more like pocket change compared to what a government needs for day-to-day operations, especially during times of conflict. The most plausible explanation is that it’s just ordinary Russian citizens buying crypto as a store of value as protection against the decreasing value of their fiat currency.
On the other hand, since early in the conflict the Ukrainian government has encouraged people to make donations for both humanitarian and military purposes using Bitcoin, Ether and some other cryptocurrencies, having managed to raise around 100 million USD’s worth of donations. The ubiquitous nature of cryptocurrencies enables almost anyone on the planet to send financial aid to Ukraine very quickly and with little effort.
In both cases, demand for cryptocurrencies has increased during the war. That, in turn, is lifting the price.
This article is available for reprint with permission from Mohr Media and a link to this page. See our syndication page for information and contact Patti Mohr.
