Bitcoin Rebounds Above $40,000 as Russians Switch to Crypto
By Michelle Toh, CNN Business
Cryptocurrency prices are surging after the Russian ruble fell to a new all-time high and Moscow was hit with new sanctions.
As of 5:25 a.m. ET on Tuesday, bitcoin had jumped 13% over the past 24 hours at $43,163, according to cryptocurrency tracker CoinDesk.
Other cryptocurrencies also rose. Ethereum climbed 10% on Tuesday to reach $2,878. Dogecoin rose nearly 6% to around 13 cents each.
Virtual currencies are traditionally seen as a gamble, but conventional assets are experiencing drags or greater volatility due to geopolitical tensions, some analysts believe they will gain traction.
According to Arcane Research, an Oslo-based cryptocurrency research firm, the trading volume between the ruble and cryptocurrencies has increased in recent days on Binance, one of the largest cryptocurrency exchanges in the world.
Investors seem to be “trying to get out of the rouble” due to its “drastic devaluation after all the sanctions”. said Bendik Schei, head of research at Arcane.
Schei added that more people are switching to tether rather than bitcoin. Although bitcoin is the most valuable cryptocurrency in the world, tether is known as “stablecoin” because it is pegged to the US dollar.
“That’s where they find the most comfort right now,” Schei said of investors. “In the current market conditions, I’m not surprised to see investors, at least those in Russia, looking for stablecoins…It’s about saving their funds, not investing.”
Over the past week, Tether has been largely resilient at around $1 each.
The stampede came as the ruble plunged on Monday, trading at 104 to the US dollar. Little changed early Tuesday.
Western powers have frozen Russian central bank assets in a bid to make it harder for Russia to soften the effect of sanctions on some of its biggest lenders and other businesses.
The measures are aimed at preventing Russia from accessing a “bad weather fund” that officials said Moscow expected to rely on when invading Ukraine. Instead of using the reserves to cushion a plummeting rouble, Russia will no longer be able to access much of the funds it keeps in US dollars.
Along with offering investors a relatively safe haven, cryptocurrencies could offer Russians a way to evade sanctions, some experts say.
US and European sanctions rely heavily on banks to enforce the rules. If a sanctioned company or individual wishes to conduct a transaction denominated in traditional currencies such as dollars or euros, it is the bank’s responsibility to flag and block those transactions.
But digital currencies operate outside the realm of standard world banking, with transactions recorded on a public ledger known as the blockchain.
— Allison Morrow, Nikki Carvajal, Jeremy Diamond, Kevin Liptak and Kate Sullivan contributed to this report.
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