• Friday, June 21, 2024
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BusinessDay

How Ukraine-Russia crisis pushes bitcoin prices up

Cryptocurrency: A new evolution of money

When the Russian forces launched a major assault on Ukraine, firing missiles on cities and military targets, on 24th February 2022, the global crypto market cap slid to as low as $1.57 trillion, losing almost 9.66 percent 24 hours later.

However, since the announcement made by the Society for Worldwide Interbank Financial Telecommunication (SWIFT) on Saturday, to disconnect some Russian banks, bitcoin prices have surged from $35,000 to $40,000.

“As everyone is fleeing from the traditional banks and looking for a safe haven, where they can access their assets or money anytime they want irrespective of the sanction, the crypto market is seen flooded with funds,” Lucky Uwakwe, an expert in Blockchain told BusinessDay.

In the hours after Russia proceeded with its ‘special military operation’ the entire cryptocurrency market turned red. Bitcoin dropped by about $5,000 to a monthly low of just over $34,000.

Apart from Bitcoin, altcoins suffered even more with double-digit price losses. However, once US President Joe Biden said the country has no intentions to get involved directly in the war, the tides turned.

Bitcoin recovered all losses almost immediately and currently sits at $40,000. The entire market cap added over $150 billion and stands above $1.7 trillion as most altcoins went on the offensive as well.

“Since a nation can be disconnected from the traditional banking system, courtesy of sanctions as in the case of SWIFT, this means there’s a need for people and nations to begin to look towards the direction of blockchain. Ukraine is beginning to accept donations in cryptocurrencies because while the war is ongoing, access to funds via banks is being limited,” Uwakwe added.

For the crypto market, experts say this is a positive trend. Countries are now talking about blockchain since the result of global sanction, the Russia-Ukraine crisis, as they are using crypto to barricade intrusion into their financial systems.

“Imagine Russia had already adopted the use of blockchain in their economy before this war, it means that even if international sanction decide to cut them off the use of an international banking system like SWIFT, they have an alternative, and hopefully be running well with or without the sanction,” Uwakwe said.

Just a few hours after the sanction was placed, some Danish reporters who were trying to leave Ukraine had to buy a used car with bitcoin as all cash had been withdrawn from the automated teller machines (ATMs).

ARTYOM @usleepwalker_ tweeted “my Ukrainian credit cards don’t work anymore. I’m safe physically in Kazakhstan, but all my savings are gone. Crypto is the only money I still have, and today I can say without exaggeration that $BTC, $ETH, and $NFT are going to save my life while I can’t come back home.”

BusinessDay also spoke with Rume Ophi, a Cryptopreacher, and he said that one major relationship between the subjects is the fact that people need to fund their survival amidst the war. “Donations are being made all over the world to people in Ukraine via cryptocurrencies, irrespective of their affiliation to the war which highlights the uniqueness of digital assets,” he said.

Read also: Ongoing Russia-Ukraine scrimmage to frustrate global post-pandemic recovery efforts

While there might be other factors affecting the prices of crypto before the sanction, Ophi explained that the effect of the war is more evident as elites in Russia who are investors in this market are being sanctioned. Since there are no alternatives to their method of transactions, the more exposure to bitcoins and other cryptocurrencies, the more the prices surge.

Data shows that over $200 billion has been liquidated since Russia and its President Vladimir Putin announced a ‘special military operation’ against Ukraine.

Extending the fall witnessed over the weekend, the crypto market plunged on Monday following an escalation of war between Ukraine and Russia. As Russia is marching towards Kyiv, the capital of Ukraine, Vladimir Putin has put his nuclear forces on high alert after the sanctions from the West.

However, Ukraine announced to hold peace talks amid the crisis. Apart from the US dollar-pegged USD Coin, all of the top digital tokens were trading lower. Avalanche moved up over seven percent, Terra tumbled five percent, while Ethereum declined four percent.

Despite major crypto coins’ fall, stable coins have shown minimal change in the last 24 hours. Some crypto experts believe investments should be in stable coins like Tether (USDT) or PAX Gold (PAXG), which are based on the value of gold. According to them, stable coins may gain popularity amidst such a fall in the crypto market.

In times like this, investors are advised to observe, not panic, think long-term and stay invested. “Invest in those assets that will hold value even after the crisis passes.”