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Bitcoin has gained almost 18% since Monday, pushing the cryptocurrency to close to $45,000 on Tuesday, after the US and its allies imposed new rounds of sanctions against Russia for invading its neighbor and Ukraine raised millions of dollars. in crypto donations.
Bitcoin
USDBTC,
it last traded at around $44,203, up 2.7% in the last 24 hours, according to data from CoinDesk.
Why, exactly, is Bitcoin recovering? Analysts have different points of view.
“While it appears that the second leg of the move was at least partially driven by a small short squeeze, overall the rally was driven by a large increase in demand,” Mikkel Morch, CEO of the hedge fund, wrote in of ARK36 cryptocurrencies. an email.
As the US and its allies impose new sanctions against Russia’s central bank, some state-owned companies and elite families, there has been some speculation that Moscow could gain leeway through cryptocurrencies.
Meanwhile, Ukraine has raised $31.7 million through over 26,000 crypto donations since Russia launched the invasion, according to crypto compliance firm Elliptic.
However, demand from Russia and Ukraine alone may not have been enough to push Bitcoin to its current level since Monday, according to Bendik Norheim Schei, head of research at crypto firm Arcane Research.
“These markets have very small volumes compared to the total market,” Schei said.
Read more: As the ruble plunges to less than a penny, Ukrainian and Russian currency transactions increase for bitcoin and stablecoins
Rance Masheck, president and founder of trading platform iVest+, said he doesn’t expect to see “tremendous price movements” from such transactions.
“I think you’re going to see a lot more transactions, just movement of money,” Masheck told MarketWatch in an interview. However, if cryptocurrencies are used to finance war or evade sanctions, they are likely to be sold for other major currencies, such as US dollars, he said.
According to Schei at Arcane Research, “what could be driving the price is the narrative of a trustless, apolitical store of value that cannot be seized and has no borders.”
“This war can strengthen that narrative and more people see value in these capabilities,” Schei said.
Louis LaValle, CEO of crypto asset management company 3iQ Digital Assets, echoed the point. “The dollar is being used as a weapon and it is very difficult to reverse course,” as Western sanctions aim to limit Russia’s access to financial markets and destroy the value of the ruble.
USDRUB,
“That puts the bitcoin reserve currency use case front and center,” LaValle told MarketWatch in an email.
“The built-in appeal of crowdfunding is sometimes lost in the bitcoin narrative, but we are really seeing it in action with tens of millions of cryptocurrency donations supporting Ukraine,” LaValle said.
Major US stock indices closed sharply lower on Tuesday. The Dow Jones Industrial Average
DJIA,
fell 1.8%, while the S&P 500
SPX,
fell 1.6% and the Nasdaq Composite
comp,
fell 1.6%.
.
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