Cryptocurrency during the War Between Ukraine and Russia

Cryptocurrencies have been in the news since Russia invaded Ukraine, according to Reuters in London, with the ever-volatile bitcoin in high demand in Russia and beyond. Here are some statistics and trends about how cryptocurrency performed during the greatest attack on a European country since WWII.

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  • Confusion regarding the Correlations

Is there a link or not? For a long time, bitcoin has been the subject of debate, with the original cryptocurrency dancing to the beat of the stock market at times and not at others. Bitcoin fell as much as 8% on Thursday after Russia launched its attack on Ukraine, as investors fled riskier assets, before clawing back the losses for the day. The S&P 500 (.SPX) rose 1.5 percent while European equities (.STOXX) lost 3.3 percent. Bitcoin and stock markets have since reconnected, albeit to varying degrees.

Meanwhile, Bitcoin reached a new high of 14.5 percent on Monday, its greatest day in a year, and is currently up 12 percent since the invasion began on Feb. 24. Stocks in the United States have achieved lesser gains, with the S&P 500 (.SPX) up 3.3 percent. The MSCI world index (.MIWD00000PUS) is marginally lower. “Throughout this crisis, it remained primarily associated with U.S. equities,” said Joseph Edwards, head of financial strategy at crypto business Solrise Group.

  • Are Cryptocurrencies Safe Haven?

Bitcoin is regarded as “digital gold” by some cryptocurrency enthusiasts, who see it as a convenient way to save funds in times of conflict or calamity. According to the argument, Bitcoin is more secure than traditional currencies because it has a finite quantity and works on a worldwide computer network beyond the control of governments. Things are seldom that straightforward. Bitcoin‘s ability to act as a safe haven is debatable: It frequently behaves like risky assets like stocks. According to investors, Bitcoin’s features fueled demand and helped it outperform traditional havens during the war. Since last Wednesday, gold has gained 2.6 percent, while the 10-year Treasury yield has dropped 8.7 percent. Analysts believe the measures will be ineffective in resolving arguments about bitcoin’s safe-haven attributes.

“We don’t believe BTC is viewed as a safe haven, and we don’t believe it should be,” said Richard Usher, CEO of crypto firm BCB Group. “Rather, its allure stems from the fact that it’s a supply-limited, credit-free digital bearer asset that’s proving to be a viable alternative to traditional banking in this context.” “It will struggle to rally further if the situation worsens and risk markets take a beating, but we believe it will still outperform.”

  • Fall for Rubble, bounce of the Bitcoin

Cryptocurrency trading has risen in Russia as the rouble has been battered by Western sanctions aimed at pinching Russia’s economy and shutting it off from the global financial system. Trading volumes between the rouble and major cryptocurrencies hit 15.3 billion roubles ($140.7 million) on Monday, up thrice from the previous week, according to researcher CryptoCompare. According to the data, rouble-denominated trades using Tether — a so-called stablecoin designed to keep a consistent value — hit 3.3 billion roubles on Monday, the highest so far this year and nearly five times more than a week ago.

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