By Billy Bambrough
Prices for Bitcoin, Ethereum and other cryptocurrencies rallied last week as the Russian invasion of Ukraine sparked fears of “catastrophic market changes”.
Bitcoin fell below $ 35,000 to then recover. Ethereum and other major cryptocurrencies were just as volatile as investors became increasingly concerned about developments.
The traders are preparing for even more extreme fluctuations after the expulsion of Russia from the international payment network SWIFT, with a former deputy chairman of the Russian Central Bank warning that “disaster” is coming to the Russian foreign exchange market.
“This move marks catastrophic consequences for the Russian foreign exchange market from Monday (today),” Sergei Aleksashenko told Reuters. “I believe that trade will be stopped and then the exchange rate will be set artificially, just as it happened during the Soviet period.”
On Saturday, the US, EU, UK, France, Germany, Italy and Canada announced in a joint statement that will impose sanctions on the Central Bank of Russia and will exclude some Russian banks from the SWIFT messaging systemwhich is used for trillions of dollars worth of transactions worldwide, measures aimed at “preventing the Russian Central Bank from using its international reserves in ways that undermine the impact of our sanctions.”
Russia appears to have about $ 300 billion in foreign currency in offshore accounts, enough to disrupt the foreign exchange market if money freezes or moves suddenly to avoid it, according to a Credit Suisse report. cites Bloomberg.
Cryptocurrencies recovered – as did stock markets – late last week as investors weighed in on sanctions against Moscow. However, measures involving SWIFT and Russia’s central bank could trigger new waves of volatility, with commodity prices soaring and concerns about persistently high inflation sustained.
The sharp volatility of Bitcoin, at a time when the price of gold is “climbing”, undermines the narrative that the world’s most popular cryptocurrency has begun to function as “digital gold” – that is, as an asset in which investors seek safe haven. in times of crisis. Some Bitcoin investors still appear confident in the accuracy of the story.
“Unlike large stock indices, Bitcoin did not slip to its lowest levels [την προηγούμενη εβδομάδα]”This detail could be very important in the discussion of Bitcoin as a safe-haven asset,” said Mikkel Morch, executive director of the ARK36 fund.
Despite the recovery, however, fears of a new Bitcoin downturn persist.
“The situation remains volatile and the $ 40,000 level is still the resistance line,” Morch added. “If Bitcoin does not break this barrier, a return to its lowest levels or find support at $ 30,000 is likely in the short term.”
“If the situation in Ukraine worsens further, Bitcoin could fall below $ 30,000, as investors will look for defense assets,” said Alex Kuptsikevich, an FxPro analyst, commenting on reports that Russia could use Bitcoin to circumvent sanctions. “Otherwise, the country will not be able to cope with the increasing pressure exerted by Western sanctions.”
Other cryptocurrency market players consider it unlikely that Moscow will resort to Bitcoin to circumvent sanctions against it.
“The idea that Russia could use Bitcoin to circumvent sanctions is primarily an exaggeration for the media,” Cory Klippsten, CEO of Swan Bitcoin, told the Telegram.
“Technically, Russia could use Bitcoin, given its uncontrolled, ‘open’ nature, but there are methods that allow authorities to detect Bitcoin transactions. It should be noted that Bitcoin is a technology in which it can have access everyone, regardless of whether one agrees with the user’s actions or not “.
So far, Ukraine has stepped up its defense efforts with $ 14 million through anonymous donations to Bitcoin, according to researchers at Elliptic, a blockchain analytics company.
On Saturday, the official account of the Ukrainian government posted the following message: “Stand by the Ukrainian people. We accept donations in cryptocurrencies: Bitcoin, Ethereum and USDT” – a stablecoin linked to the US dollar. Within hours, millions of dollars were raised in two digital wallet accounts
“Demand for Bitcoin is growing worldwide, as the need for a decentralized, anti-censorship storage medium becomes more and more apparent,” Klippsten added.
Read also:
* Russian billionaires have lost almost $ 90 billion amid an invasion of Ukraine
* $ 180 billion “extinguished” from the cryptocurrency market amid tensions between Russia and Ukraine
Source: Capital
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