Following Russia’s attack on Ukraine and the sanctions placed by the US and its allies on the attacker, Bitcoin experienced an unprecedented price surge that put it well past the resistance level of USD 40,000 per coin.
An element pushing the recovery in cryptos generally was an increase in demand from Russian citizens migrating from the Russian ruble. This came after sanctions resulted in a 30% decrease in the price of the Russian monetary unit. The price decline triggered a bank run of citizens afraid of losing their cash reserves due to the crackdown on the acquisition of foreign currency.
Crypto Gains & Fall of The Ruble
Leading cryptocurrencies have maintained Monday’s increases on Tuesday, as the security issue in Ukraine caused by Russia’s incursion worsened. Bitcoin was trading above $44,000 early Tuesday, up from $38,000 the day before. The Ethereum platform’s token, ether, was selling at over $3,000, up from $2,600 on Monday. As a result, Bitcoin’s growth outpaced gold following the Russian invasion. As per Coinmarketcap, Bitcoin soared as high as 16.8 percent on the day to $44,527. While Ether rose 15.2 percent to $3,029 and Dogecoin rose nearly 10% to $0.136406.
The steep increase in Bitcoin and several cryptocurrencies coincides with a significant increase in Russian currency and Ukrainian hryvnia trading activity. Transaction volumes between the Russian ruble and bitcoin reached a nine-month high. As the nation’s national currency plummeted to historic lows in the aftermath of the Ukraine attack.
Transactions with cryptocurrencies terminated in Russian rubles hit new highs. It followed the financial panic that had Russian savers queuing in huge lines at ATMs.
The Ruble Falls
The sanctions against Russia are one of the factors that could explain the rebound of crypto asset values. Which plunged when Russia launched its invasion. The US and Europe confirmed the withdrawal of many Russian banks from the SWIFT network. It stands for the Society for Worldwide Interbank Financial Telecommunications.
Additionally, the United States, the European Union, Switzerland, and Japan sought to seize the Central Bank of Russia’s international reserves. It makes it difficult for the organization to protect its currency. As a result, the ruble dropped about 30% against the dollar on Monday, leaving it worth less than a cent.
Why Russians Flocked to Crypto
Bitcoin appears to offer a solution out of the financial disaster that Russia has fallen into as a consequence of Western sanctions. Because it lacked foreign reserves to maintain the currency, Russia was compelled to adopt capital restrictions and foreign exchange restrictions.
According to Kaiko, a Paris-based cryptocurrency analytics service, the number of ruble-denominated bitcoins increased to approximately RUB 1.5 billion on Thursday, the largest figure since May 2021.
As per Kaiko data, Russian residents are not solely using Bitcoin to avoid the currency crisis. Tether trading volumes in rubles and hryvnias followed a similar pattern. Tether is the world’s largest stablecoin by market capitalization, providing price stability in the frequently turbulent world of cryptocurrencies by maintaining a 1:1 ratio to the US dollar. According to Kaiko data, USDT/RUB trade volume reached an eight-month high of 1.3 billion rubles on Thursday.