Bitcoin, Ethereum, and cryptocurrency prices have swung wildly over the past week as the Russian invasion of Ukraine sends shockwaves through global markets.adding to fears of a “cataclysmic market turnaround.”
The bitcoin price dipped below $35,000 per bitcoin this week before recovering sharply. Ethereum and other major cryptocurrencies have been similarly volatile as “extreme fear” grips investors.
Now, traders are bracing for more severe turns after Russia was kicked out of the world’s leading international payments network, SWIFT, with a former deputy chairman of Russia’s Central Bank warning of a “catastrophe” in the Russian forex market.
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“It means there is going to be a catastrophe on the Russian currency market on Monday,” Sergei Aleksashenko said. Reuters. “I think they will stop trading and then the exchange rate will be fixed at an artificial level like in Soviet times.”
On Saturday, the US, EU, UK, France, Germany, Italy and Canada announced in a joint statement that they would penalize Russia’s central bank and exclude some Russian banks from the SWIFT messaging system, used for online transactions. worth trillions of dollars. around the world, and designed to “prevent the Russian Central Bank from deploying its international reserves in a way that would undermine the impact of our sanctions.”
Russia is believed to have about $300 billion in foreign currency held abroad, enough to disrupt money markets if it freezes over sanctions or moves suddenly to avoid them, according to a Credit Suisse report reported by Bloomberg.
Bitcoin, Ethereum and cryptocurrency prices rallied along with stock markets towards the end of this week as traders accepted Russian sanctions. However, it is believed that the latest measures could trigger renewed volatility, with rising commodity prices and inflation fears unnerving investors in recent weeks.
The extreme price volatility of Bitcoin at a time when the price of gold has surged has undermined the popular narrative that Bitcoin has begun to act like digital gold, a safe-haven asset that investors flock to in times of perceived risk. , although some Bitcoin and crypto investors remain confident.
“Unlike the major stock market indices, Bitcoin has not actually posted a lower low [this week]Mikkel Morch, CEO of digital asset fund ARK36, wrote in an emailed note. “This small detail could be of great importance in terms of the conversation around Bitcoin as a safe haven asset.”
Despite the recovery in the prices of bitcoin, ethereum and crypto, fears persist that the price of bitcoin could fall again.
“The situation remains volatile and the $40,000 levels remain resistance,” added Morch. “Unless Bitcoin significantly breaks this barrier, revisiting range lows or even $30,000 support is still on the table in the near term.”
“If the situation in Ukraine escalates further, Bitcoin may drop below $30,000 as investors move into defensive assets,” Alex Kuptsikevich, senior financial analyst at FxPro, said in emailed comments, noting that reports Russia could use cryptocurrencies to circumvent sanctions. “Otherwise the country will not survive the mounting pressure of sanctions from Western countries.”
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However, others in the bitcoin and crypto community believe that their unlikely bitcoin could be used by Russia to evade global sanctions.
“The suggestion that Russia could use bitcoin to evade sanctions is mostly media hype,” said Cory Klippsten, CEO of bitcoin buying app Swan Bitcoin, via Telegram.
“Technically, Russia could use bitcoin given its open and permissionless nature, but there are methods for agencies to track bitcoin transactions. It is important to note that bitcoin is a technology that can be accessed by anyone, regardless of whether they agree or I agree with your actions or not.”
Nearly $14 million has been donated to the Ukraine war effort so far through anonymous bitcoin donations, according to researchers at Elliptic, a blockchain analytics company.
On Saturday, the official Twitter account of the Ukrainian government posted: “Support the people of Ukraine. We now accept donations in cryptocurrencies. Bitcoin, Ethereum, and USDT,” a stablecoin pegged to the US dollar. Two cryptocurrency wallet addresses collected millions of dollars worth of bitcoin, ethereum in just a few hours.
“Around the world, the demand for bitcoin continues to rise as the need for a decentralized, censorship-resistant store of value becomes more apparent every day,” Klippsten added.