Cryptocurrencies attract investors keen to shore up money in borderless and censorship-resistant assets.
(Picture: REUTERS)The price of Bitcoin has spiked 13% on the back of Western sanctions against Russia, reversing the cryptocurrancy’s recent losses.
Bitcoin reached more than $43,000 on Tuesday morning, according to CoinMarketCap’s price index, having traded below $35,000 as recently as Thursday.
Over the last seven days, its value has risen more than 17%.
The rise has been in part attributed to signs that Russia is turning to cryptocurrency after being ejected from the SWIFT international payment system, along with other financial sanctions.
Over the weekend, Western nations, including the UK, European countries, the US, as well as Japan, moved to limit the Russian central bank’s access to more than $600 billion in reserves, with the intention of preventing any support for the struggling rouble.
The Russian currency sank to a record low against the US dollar on Monday.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “As Russians watched their currency go into freefall, there has been a surge of purchases of Bitcoin denominated in roubles, as some speculators scramble to insulate themselves from the crisis.”
She pointed out that Bitcoin has risen 14% since sanctions were imposed and said it was “clearly facing local demand in catastrophic times”.
Bitcoin, and other cryptocurrencies, attract investors who want to shore up their money in borderless and censorship-resistant assets.
But Bitcoin’s tendency towards volatility means it isn’t necessarily the safe haven investors hope it is, Streeter warned.
Ipek Ozkardeskaya, senior analyst at Swissquote, said both Russians and Ukrainians were relying on Bitcoin to move their funds out of the traditional banking system.
“Being able to transact value in Bitcoin also helps Russian oligarchs go around the Western sanctions,” he added. “It may also help Russian companies and even the Russian central bank to move funds.”
Other cryptocurrencies, including Ethereum and BNB, have also seen double-digit percentage gains in the last 24 hours.
Victoria Scholar, head of investment at Interactive Investor, said: “Previous equity market sell-offs have been correlated with a drop in the crypto complex. However this time, things look different with crypto attempting to break away from traditional assets and prove its value in times of military conflict.”
