- Bitcoin has proven to be one of the options for the Russian population to try to avoid the negative effects of the beginning of the war with Ukraine.
- Ruble/Bitcoin pair trading volume surges to highs not seen since mid-2021 trading $1.5B as of today.
Since the beginning of the new sanctions imposed on Russia by NATO members, due to the definitive invasion of Ukraine, we have seen how the Ruble, Russia’s fiduciary currency, has fallen to its historical low, but in addition, we have seen as the price of Bitcoin (BTC) is more expensive in Russia than in the rest of the world.
BTC context in Russia
The february 9 Russia presented a sudden change of discourse on Bitcoin (BTC). Going from being regulated, stigmatized and even criminalized in some use cases to a currency to now being a completely legal, regulated and permitted activity.
Many trusted that it was a Russian move seeking to solve one problem and raise capital for another. First of all to reduce the sanctions imposed in 2014, due to the annexation of Crimea.
Second, to encourage Bitcoin (BTC) miners to set up their businesses in the Siberian area, an area known for its high gas production, as well as the large amount of wasted electrical energy. In addition, the Siberian polar climate would make cost terms almost invisible.
Thus, the conditions were in place for the Russian population to embrace BTC and cryptocurrencies without the watchful eye and hard arm of the Kremlin. In short, so that organic adoption without pressure will begin to take shape throughout the vast territory of the former Soviet republic.
Invasion of Ukraine
However, our part of the world woke up again at the end of February with somewhat worrying news from US intelligence sources. “Russia intends to invade Ukraine”.
In part because of a conflict that dates back to the dissolution of the USSR in 1991, because of the annexation of Crimea in 2014, and because of Ukraine’s recent request not only to belong to the European Union but also to the Treaty Organization of the North Atlantic (NATO).
Therefore, it led a large part of the crypto ecosystem to understand another edge of Russia’s decision to legalize Bitcoin (BTC). A possible increase in sanctions by the West.
History is written day by day
The story of what happened at the end of February is already known, Russia militarily invaded Ukraine, starting a feared and unexpected war at the gates of the European Union with nuclear threats included.
Due to the beginning of the war between the two ex-Soviet nations, what experts inside and outside the world of cryptocurrencies intuited was coming true.. The decision to legalize BTC was an anticipated and planned move to the possible warlike development and the subsequent increase in sanctions.
Sanctions which immediately the West did not hesitate to launch its sharpest weapon. The disconnection of some important swift russian banks, or in short, the platform where international banks transfer money between them.
The sanctions included the freezing of all the capital of these banks in western territorythe closure of the schengen airspace to Russian commercial flights, personal sanctions on the entire Russian oligarchy, termination of all oil and gas agreements with Russia and more.
Even the elimination of Russia from the Olympics, his F1 career, from competitions such as the Champions League and the Europa League and much more.
This situation is expected to affect the entire Russian Status Quo. But, in addition, it has also had an impact on the common population, who, willingly or not, have been dragged into the war and therefore into sanctions.
In a world as globalized and interconnected as ours, it is normal for the big Russian banks to have a large part of their capital in banking subsidiaries spread all over the world, especially Europe, Asia and the United States.
Once the sanctions not only did they remove Russia from the Swift but their funds would be blocked, they left banks inside Russia with billions of dollars in the red. Money which, in part, belonged to the Russian citizen.
Immediately after the announcement of the war and the sanctions, investors, Russian or not, began to unload their Russian shares, which generated a historical fall of Russian stock indices.
In addition, the panic of a possible bank corral spread rapidly in the population, which began to make long lines to withdraw their money and savings deposited in banks or invested in shares of Russian companies.
All this generated great pressure on the value of the Ruble, which went from costing 77 rubles per dollar to even 120 rubles per dollar. Representing a devaluation of the Russian currency of more than 30% in a matter of hours. This being the lowest Ruble value in all history.
In a nutshellthe Russian population, overnight became 30% poorer. This without counting the possible increase in inflation caused by the closure of the import of products from Europe and Asia.
Bitcoin proving its worth
So, imagine yourself as a Russian citizen with the impossibility of exchanging your currency for the dollar or the euro and it is in a clear fall, a high risk of rising inflation, the impossibility of taking your capital or investments out of the country. What would you do? with your savings, investments and the money under your mattress?
It seemsr, Bitcoin (BTC) has proven to be one of the options of the Russian population to try to avoid the negative effects of the beginning of the war with Ukraine.
generating that the trading volume of the Ruble/Bitcoin pair has increased to maximum not seen since mid-2021. Being over $1.5 billion as of today.
“The activity was mostly concentrated on Binance and not just Bitcoin, but also Tether with $1.3 billion”. Clara Medalie expressedKaiko Research Analyst.
Said increase in demand for BTC in Russia generated an expected phenomenon in cases of sudden increases in demand in a particular area. The price of BTC cost more in Russia than anywhere else in the world.
While the world traded BTC still below $40,000 yesterday, in Russia people they already bought it for $41,000 and rising. It is worth noting that a similar situation occurred on the Ukrainian side.
But this is not all, said increase in Russian and Ukrainian demand and the increase in prices in these two regions, caused Bitcoin (BTC), and much of the crypto market, to begin a new upward trend.
Do you think Bitcoin is taking part in this war? Or on the contrary do you think that the neutrality of Bitcoin (BTC) is pure oxygen for the population of both Ukraine and Russia?
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