The crippling sanctions on Russia after it launched a full-scale invasion of Ukraine have led to the collapse of the ruble. At the same time, Bitcoin’s value has once again risen. In this shifting dynamic, Bitcoin’s market cap has now eclipsed that of the Russian ruble.
Bitcoin has a market cap of $839.1 billion while ruble’s market cap as of February 1 was around $629 billion, according to data from CoinMarketCap.
Sanctions by the US, UK, France, Germany, NATO allies, EU, Japan, and Australia have caused the ruble to collapse almost overnight with the current exchange rate being $1 = 109 ruble, compared to 77 ruble on February 20.
At the same time, Bitcoin has once again defied expectations by reversing its bearish trends and climbing back up to above $44,000. Bitcoin is up by over 15 percent in the past week, paring much of the losses it had suffered earlier in the year.
The sudden change in Bitcoin’s fortunes comes as a result of the ruble’s collapse. Russians have stored their wealth in Bitcoin as a measure of safety against further erosion of wealth.
“Bitcoin was created for the same purpose where it acts as a store of value on one side and also to enable fast and free transactions on the other side. Both these utilities are becoming visible now. A lot of people in Russia are going in for Bitcoin due to the ruble drop. Ukraine’s government had also announced accepting Bitcoin as donations. This is a very good use where governments are looking at cryptos during such crisis and anonymously people are also able to contribute,” Sathvik Vishwanath, co-founder, Unocoin, said to Financial Express Online.
“In these uncertain times, we have seen an uptick in the utility of bitcoin and other cryptocurrencies. It goes without saying the defining characteristics of Bitcoin allow it to act as a safe haven during turbulent times,” Paolo Ardoino, CTO of the crypto exchange BitFinex, told The Independent.
With Bitcoin quickly emerging as a haven for wealth for Russians, fears have emerged that many of Russia’s oligarchs may also store their billions in cryptocurrencies. For President Vladimir Putin’s closest associates, who happen to be billionaires, sanctions would be unacceptable. The US government has already amended its sanctions to include digital assets and cryptocurrencies.
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“All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in … deceptive or structured transactions or dealings to circumvent any United States sanctions, including through the use of digital currencies or assets or the use of physical assets,” read new regulations from the US Treasury Department.
But cryptocurrencies seem to be mostly used by the masse. While the Russians are trying to hold on to their savings, the Ukrainians are receiving crypto donations to defend against Putin’s aggression.
(Edited by : Thomas Abraham)