Bitcoin has surged. The world’s number one digital currency by market cap is once again trading above the $40,000 mark, meaning the Russian invasion of Ukraine may be having sudden opposite effects.
Ukraine Invasion May Have Aided BTC
Over the past week, the world watched in horror as Russia invaded its neighbor Ukraine. The price of bitcoin immediately began to tank as fears of war began running across the globe. Traders began to view their digital asset savings collapse, and bitcoin ultimately fell to around $36,000 – more than $30,000 less than where it was trading just last November.
However, now it looks like the currency is beginning to rebound. Could it be that global conflict is pushing bitcoin to the top of the financial ladder? Or has the currency just become mature enough to bolster and repair itself?
In addition, it looks like the Russian ruble has collapsed. As the native currency of Russia, the ruble is worth less than one U.S. cent. Overall, the currency has fallen by roughly 30 percent in just the last few days alone.
Many are looking at the situation and claiming bitcoin has the capacity to run the world’s financial industries. Nayib Bukele – the president of El Salvador – took to Twitter and wrote:
The intrinsic value of bitcoin is now in full display to the whole world.
Thomas Westwater – an analyst with Daily FX – explained in an interview that bitcoin had broken psychological barriers and was likely to turn up the heat on its price. He commented:
The cascade of sanctions being piled onto Russia from the United States and its allies, including the removal of major Russian banks from the SWIFT messaging system, has effectively marginalized the Russian banking system from the global financial markets, casting doubt on Russia’s financial ability to weather the economic penalties. The Russian ruble tumbled further against the greenback overnight, with USD/RUB rising more than 20 percent.
He also stated the price of bitcoin spiking could have a lot to do with surges in trading of both the ruble and the hryvnia, the currency of Ukraine. He stated:
Russian oligarchs and others who fear being impacted by the sanctions may be fleeing to bitcoin, given its perceived insulation from the traditional financial system. Ukraine’s Vice Prime Minister, Mykhailo Fedorov, requested major exchanges to restrict users with a Russian address on Monday.
More People Trading Bitcoin?
Rance Masheck, CEO of iVest+, explained it’s likely several individuals in both Russia and Ukraine have turned to bitcoin given their banks are falling. He said:
Given the situation in Russia, it is likely many Russian citizens and possibly even their banks are moving to bitcoin as the ruble crashes. Keep in mind that while the ruble is down considerably since last week, the central bank is still supporting it and propping it up, so there is concern in Russia it will fall further.