Bitcoin (BTC) price jumps as Russia-Ukraine conflict continues

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Bit­coin jumped as much as 16% on Tues­day, con­tin­u­ing its sharp rebound as the Russ­ian assault on Ukraine con­tin­ues and the U.S. ratch­ets up sanctions.

The cryp­tocur­ren­cy was last up 6% in the pre­vi­ous 24 hours to $44,219.50, accord­ing to Coin Met­rics. That ral­ly comes after cryp­tocur­ren­cy prices plunged last week as risk assets such as stocks sold off fol­low­ing Rus­si­a’s inva­sion of Ukraine.

Ether jumped 5.4% to $2,980.38. Ear­li­er in the day the cryp­to asset rose above $3,000.

Some ana­lysts have attrib­uted the big surge to investors buy­ing the dip, Rus­sians’ attempts to use cryp­to to evade sanc­tions and Ukraini­ans and Rus­sians try­ing to get their mon­ey out of their respec­tive countries.

Crypto to evade sanctions?

Many have sug­gest­ed Rus­sia could use bit­coin, which is not owned or issued by a sin­gle author­i­ty like a cen­tral bank, to evade sanc­tions. Vet­er­an investor Mark Mobius said that could be one rea­son behind bit­coin’s rise.

“I would say that’s the rea­son why bit­coin has shown strength now — because the Rus­sians have a way of get­ting mon­ey out, get­ting their wealth out,” Mobius, found­ing part­ner of Mobius Cap­i­tal Part­ners, told CNBC on Tues­day.

Bit­coin’s ral­ly began after the U.S. imposed fur­ther sanc­tions on Rus­sia over the week­end tar­get­ing its cen­tral bank, on top of exist­ing sanc­tions aimed at oli­garchs and Rus­si­a’s sov­er­eign debt to sev­er the coun­try from the glob­al finan­cial sys­tem.

Leah Wald, Valkyrie Invest­ments CEO, said the idea that Russ­ian mar­kets par­tic­i­pants would use cryp­to to get around sanc­tions “is high­ly like­ly but mis­guid­ed, since it is far eas­i­er to track on-chain trans­ac­tions than cash.”

Michael Rinko, ven­ture asso­ciate at Ascen­dEx, said it would be eas­i­er to cen­sor the Russ­ian gov­ern­ment if it used bit­coin exclu­sive­ly to man­age its cen­tral bank reserves. That way, any­one could see all mon­e­tary flows into and out of the bank accounts owned by the cen­tral bank, due to Bit­coin’s pub­lic nature.

“At that point it would depend on Europe and the U.S. to pres­sure the biggest exchanges — Coin­base, FTX and Binance — to black­list the address­es asso­ci­at­ed with Rus­sia, and then no oth­er major exchange would want to inter­act with funds that orig­i­nat­ed from those address­es,” Rinko said. “So they’d be able to freeze bit­coin funds or oth­er cryp­to that touched a Russ­ian account.”

Stablecoins as a safe haven

Since Thurs­day, when the inva­sion by Rus­sia began, trans­ac­tions on cen­tral­ized bit­coin exchanges in both the Russ­ian ruble and the Ukrain­ian hryv­nia surged to their high­est lev­els in months, accord­ing to Kaiko data.

Clara Medalie, research direc­tor at cryp­to data provider Kaiko, not­ed that ruble-denom­i­nat­ed vol­ume for the sta­ble­coin Teth­er is more than twice as high as bit­coin vol­ume, which she said sug­gests sta­ble­coins could play a more impor­tant role as a safe haven asset or in cir­cum­vent­ing sanctions.

“Most dol­lar-pegged sta­ble­coins such as Teth­er or USDC are issued by cen­tral­ized com­pa­nies that could be tar­get­ed by sanc­tions, which could force them to mon­i­tor trans­ac­tions,” she said. “There is prece­dent to cen­ral­ized sta­ble­coin issuers ‘black­list­ing’ cer­tain address­es, so it will be inter­est­ing to see how the role of sta­ble­coins evolves through­out the crisis.”

Rinko said the con­flict in Ukraine isn’t the rea­son for cryp­to’s out­per­for­mance in the mar­ket this week. Instead, investors are pric­ing out Fed­er­al Reserve rate hikes, he said.

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