The recent geopolitical tensions in Russia and Ukraine have dramatically affected the prices of cryptocurrencies. When Russian President Vladimir Putin announced a “military operation” in Ukraine, the crypto market went down by 10%. However, the very next day, the market recovered, and new highs were recorded. Bitcoin, which went down by 8%, rose by over 15% in the next seven days. Other cryptocurrencies like Ethereum and Altcoins have also witnessed significant surges in their prices.
This was quite contrary to the world’s expectations: as the major markets were collapsing, the crypto market stood strong in the face of geopolitical tensions. This demonstrated the potential of cryptocurrencies as an alternative financial system that offers new ways to transact and hold assets even in the midst of political chaos. However, the political tensions have definitely increased the volatility of cryptocurrencies as their values fluctuate almost every day.
Responding to the invasion, the European Union, Japan, the United States, and Australia have imposed sanctions on Russia and its financial institutions, which has increased the pressure on the Russian currency – the Ruble. While Ukraine is receiving millions of dollars of cryptocurrency in donations, the Russian Ruble is trying to save itself through crypto-assets. The next day after the Russian invasion of Ukraine, the trading volume of the Ruble went up by 260%. Similarly, in Ukraine, where cryptocurrency is now a legal tender, the transactions in Ukrainian Hryvnia have recorded unprecedented highs.
Although crypto exchanges are facing high pressure to block any transactions with Russia, they have stood strong and not taken any such step. They maintain that such sanctions are not only feasible but also cannot be effective for an institution as large as Russia. Besides that, the traceability of blockchain chain technology will not allow Russia to replace billions of dollars of funds into crypto assets. So, a…
