War puts a country’s economy at risk, and the ongoing war between Russia and Ukraine is affecting both countries. Both parties saw a bank run (where several people want to withdraw large amounts of money at once) threatening their economies.
The uncertain times have put cryptocurrency in the limelight yet again. Though traditionally gold was considered a safe market during the economic crisis, Bitcoin appears to have taken its position in the latest scenario. Bitcoin is easier to store than gold, appears to be the general consensus.
The Ukrainian government requested crypto aid on Twitter, and the world responded with more than $50 million worth of cryptocurrency. Ukraine announced its plans to mint NFTs to support the military and fund it.
Russia doesn’t seem to be far behind. It’s believed that Russia will use cryptocurrency to get around the sanctions imposed by the US. It’s interesting to note that crypto trading has increased in Russia as the country’s currency fell to an all-time low of 118.35/ dollar. The trading volume of Rouble and crypto has doubled and tripled, showing a clear sign that people want to convert their savings to crypto.
Cryptocurrencies during Russia’s war
However, this excitement has pushed the already volatile crypto market into hyperactivity. Bitcoin fell almost immediately after Russia launched its attack on Ukraine. Despite being limited in number and easier to store, Bitcoin isn’t what one would term a non-risky asset. In fact, cryptocurrency is associated with high risk, and the returns are unpredictable at the best.
The markets show a clear indication of the ongoing confusion between fiat currency, crypto, and gold. The value of gold is up by 2.6%. The US Treasury’s yield fell a whopping 8.7% in a short time.
Cryptocurrencies are a double-edged sword in these uncertain conditions, and investments should be made after careful thought and planning.