Immediately following Russia’s attack on Ukraine, global stock exchanges and crypto markets took a tumble, with Bitcoin dropping below $35,000 and Ethereum experiencing lows of $2,400. Many were prepared for another chilly month as the crypto winter continued to blow over, however, the conflict in Ukraine has caused the market’s trajectory to head in another direction. A little over a week since Russia officially took aim at Ukraine, the crypto markets have seen heightened trading volumes and value increases.
Despite devious reassurances that the Kremlin will not invade Ukraine, on 24 February 2022 Russian troops descended on its neighbouring country declaring war. Russian President Vladimir Putin accompanied these invasions with threats to the Western world of “dangerous consequences” should any country attempt to fight with Ukraine.
While no country has joined the fight, many have donated weapons and provided financial assistance to the significantly smaller opponent of the two. Countries around the world were also quick to impose sanctions on Russia, from freezing bank accounts to shutting airspace for Russian planes. This had a devastating effect on the country's economy as just four days later the Russian ruble plummeted to record lows against the dollar, losing a third of its value in offshore trading.
The War’s Effect On Crypto
Immediately following Russia’s attack on Ukraine, global stock exchanges and crypto markets took a tumble, with Bitcoin dropping below $35,000 and Ethereum experiencing lows of $2,400.
The Russian invasion, alongside looming inflation, the U.S. Federal Reserve possibly increasing interest rates and geopolitical tensions in Europe have all contributed to Bitcoin losing almost half of its value since its November high of $68,990. Analysts warn that volatility is unlikely to decrease in the coming weeks.
Since the initial drop, Bitcoin’s price has seen over 10% growth alongside increased trading volumes, essentially wiping out its monthly losses. According to sources, Bitcoin was trading at $46,000 on several Russian exchanges on Monday, 28 February, roughly $5,000 more than the US price at the same time.
Based on significant increases in the BTC/RUB trading pair, “magnitudes greater” than BTC/USD, it is believed that Russians are attempting to bypass the sanctions imposed globally through the use of digital currencies. Increased use of the BTC/UAH trading pair has also been witnessed.
According to data from crypto firm Kaiko, trading volumes using the ruble have increased to highs not witnessed since May last year, while trading volumes using Ukraine’s hryvnia have surged to higher levels than the last peak in October.
With the market’s recent volatility and the impending geopolitical uncertainty, experts advise investors to stick to their long-term investment strategies and avoid knee-jerk reactions to the market’s changes. They also strongly recommended putting a long-term strategy into place if there is not one in place already.
Crypto Donations Pour In
Alongside the widespread increase in trading volumes, there have also been considerable crypto donations made to Ukrainian war efforts. While roughly $500,000 worth of cryptocurrencies were donated to military organisations in late 2021, crypto analysts report that over $30 million worth of Bitcoin, Litecoin, Ether, and more have been donated in the last few days.
A Ukrainian group called Come Back Alive reported that they received $3.4 million the day after the initial attack. The Ukrainian government have teamed up with Ukraine's Kuna exchange to manage the funds and convert to fiat as needed. Prioritizing transparency, roughly half the funds so far have been used to supply civilians with food, medicine, gas, and firearms, while another wallet has been created to fund the army directly.
Just a week before the war broke out, Ukrainian authorities officially legalized cryptocurrencies, allegedly amid the fears of an impending war. The official Twitter account of the Ukrainian government published this tweet over the weekend: "Stand with the people of Ukraine. Now accepting cryptocurrency donations. Bitcoin, Ethereum and USDT." The two wallet addresses they released reportedly received donations amounting to $5.4m in just eight hours.
We will continue to report on the Russia Ukraine conflict and its effect on crypto, stay up to speed with our Oobit blog.
Oobit Technologies Pte, 50 Raffles Place #37-00 Singapore Land Tower, Singapore (048623). is a company registered in Singapore (no:201716443G), that has been approved as Appointed Representative of Oobit Technologies OÜ, Harju maakond, Tallinn, Lasnamäe linnaosa, Väike-Paala tn 2, 11415, (no: 14852617 ). Which is authorized and regulated by the FIU (no: FVR001421 and FRK001304).