Crypto and the War in Ukraine

The economies of the nations participating in the war tend to suffer. In addition to the loss of human life, the economy suffers greatly. Property damage, rising debt levels, a lack of clarity about the country’s future, and lost opportunities are only a few examples of the many costs associated with the war. There has been a run on banks on both sides of the border since the fighting started. A bank run occurs when many bank customers decide to take their money out of the institution. To stabilize the free fall of the rouble’s value, the Russian central bank even increased its interest rates by 20%. Gold is seen as a safe refuge in these uncertain times. Bitcoin, on the other hand, seems to be on the upward. While carrying gold around is cumbersome, remembering your crypto’s private keys is much simpler, since the value of the fiat money is in free fall. Testimony is emerging from Ukrainian migrants who can maintain some financial security because they carry cryptocurrencies. According to Ukraine’s vice president’s tweet, the crypto community has given more than $70 million to the country.

Cryptocurrency has now turned into a two-edged sword. There’s no doubt that it’s an excellent way to avoid the financial penalties that have been placed on Russian billionaires and the Russian government. Any way you look at it, cryptocurrency is apolitical and now in the news. As the number of Bitcoin addresses holding more than 1,000 Bitcoins has risen, people have begun to buy bitcoin more than ever. The amount of Bitcoin to rouble transactions has likewise hit a new high point. As a result, roubles are being sold to fund the purchase of ever-increasing amounts of Bitcoin. The greatest assault on a European nation since World War II has taken a toll on the value of cryptocurrencies.

There is a clash of stakes. For a long time, that has been the issue for bitcoin, with the original cryptocurrency dancing to the equity beat and not. After Russia invaded Ukraine, Bitcoin fell by 8% as investors fled riskier investments. It then recovered some of its losses. Europe’s stock markets were down 3.3%, while the S&P 500 gained 1.5%. Since then, the trajectories of bitcoin and equities have been intertwined, although in different ways. Bitcoin was up 14.5 percent, its greatest day in a year, and currently stands up 12 percent since February 24, the day before the invasion started. The S&P 500 index of US equities has risen by a more modest 3.3%. A little decline may be seen in the MSCI global index.

The term “digital gold” has been coined by cryptocurrency enthusiasts to save money in the event of a natural catastrophe or conflict. According to the idea, Bitcoin has a finite quantity and works on a worldwide computer network that is beyond the control of governments, making it more secure than conventional currencies. In reality, it’s never that easy. Bitcoin’s safe-haven chops are unclear: It’s more likely to act like a riskier asset like a stock than a bond. Amid the battle, bitcoin’s qualities have fueled demand and helped it outperform other conventional safe havens, according to investors. The gold price has risen by 2.6 percent, while the yield on the US 10-year Treasury has plummeted by 8.7 percent. Analysts, however, cautioned that the developments might not be enough to resolve the debate over bitcoin’s safe-haven qualities. For the most part, we don’t believe BTC should be seen as a “haven” currency; rather, its appeal lies in its ability to serve as an alternative to established financial institutions in this present climate.

BTC has gone rouble routed. The Russian rouble has been pummeled by Western sanctions to squeeze Russia’s economy and sever it from the global financial system. Last month, the Russian rouble was trading at an all-time low of 118.35 roubles to the dollar. The amount of rouble-to-cryptocurrency trading surged three-fold. Tether, a so-called “stablecoin” meant to maintain a constant value, had its greatest volume of rouble-denominated trading, with 3.3 billion roubles traded. According to the numbers, Russians hurry to convert their wealth into bitcoin. In a nutshell, cryptocurrency has become a two-edged sword. No question that it’s a great strategy to evade the financial penalties that have been imposed on Russian oligarchs and the Russian state.