Since Russia invaded Ukraine on February 24th, Bitcoin has seen high turmoil and has gone from highs of nearly $45,000 to lows of just under $35,000 in less than two weeks. With turmoil like that, it has been like a March Madness bracket for investors and holders of Bitcoin to see the movement of one of the most popular cryptocurrencies on the market. After the Russian invasion began, Bitcoin fell to a low of $34,682.00 before coming back later during that trading day.
A Catch-22: How the Russia/Ukraine War Has Both Helped and Hurt Bitcoin
While the initial outbreak of the Russian invasion sent Bitcoin lower, the crypto recovered on massive amounts of Bitcoin donations being sent to groups to help the people of Ukraine. One particular Ukrainian non-governmental organization (NGO), Come Back Alive, has raised nearly $55 million in Bitcoin donations as of March 3rd from over 102,000 donations that first started on February 24th. While those donations in Bitcoin have been something helping fuel Bitcoin higher in the markets, something else has hurt Bitcoin as of late from the Russian invasion of Ukraine.
With countries around the world sanctioning Russia for their invasion of Ukraine, and companies pulling out their businesses and partnerships with Russia, there is a fear that Moscow will use Bitcoin and other cryptocurrencies to avoid the sanctions that are being put on Russia. With the talk of Bitcoin being used by Russia on the table, countries that wish to keep the economic pressure on Moscow might resort to regulations on Bitcoin to prevent people in their country from doing business with Russia via Bitcoin transactions. These regulations are seen as intrusive to people in the crypto community, who see crypto as a decentralized currency and not something that governments around the world should regulate.
Whenever regulation of Bitcoin comes into the picture, people holding Bitcoin tend to leave the holding for something else to invest in. Those who have left in fear of regulation have put a dent in Bitcoin’s value, holding it back from reaching new heights. If countries decide to regulate Bitcoin, then $33,000 might not be too far off if there are announcements of Bitcoin regulations.
Is the Threat to Bitcoin From Russia Avoiding Sanctions A Reality That Can Happen
While there aren’t any actual indications that Russia would start using Bitcoin to avoid sanctions, it has been discussed among all the countries that had planned on sanctioning Russia, that Russia could use Bitcoin to avoid the sanctions. The Bitcoin play by Russia could happen; however, Russia has a different route that they can take with China to work around Russia being sanctioned from SWIFT, the international payments system. The alliance that Russia and China have can prove to be a problem if China does aid Russia with getting around sanctions imposed on the country.
If China doesn’t help Russia, Bitcoin could be used as a workaround, as Russia was talking about recognizing cryptocurrencies as legal tender before they invaded Ukraine. President Vladimir Putin has been pushing for the Russian Central Bank, the Finance Minister, and the Deputy Prime Minister to come to an agreement with the legalization and regulation of cryptocurrencies. While all sides involved have yet to come to an agreement, the economic sanctions on Russia could push these people involved to the point of recognizing cryptocurrencies in Russia.
Bitcoin and Russia: Russian Citizens Holding and Waiting on Acceptance of the Cryptocurrency in Russia
While crypto legalization in Russia was a thing before their invasion, it is now fueled by the sanctions they are now faced with. The previous talks that Russian government officials were having with the Russian Central Bank would allow businesses in Russia to accept crypto as a form of payment while allowing the Russian government to tax crypto. Russian citizens have an estimated 2 trillion rubles, which equals about $20.8 billion, of cryptocurrencies.
With Russians holding on to that much crypto and economic sanctions ramping up, Russia might change its mind about Bitcoin and cryptocurrencies. The downside is that if Russia does go through with plans on accepting crypto for payments, other countries might start cracking down on Bitcoin and crypto in an attempt to stop Russia from getting around their sanctions.
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