The ongoing Russian-Ukrainian war has sparked huge debates among market enthusiasts about whether cryptocurrencies are a safe haven asset
The ongoing Russian-Ukrainian war has sparked huge debates among market enthusiasts about whether cryptocurrencies are a safe-haven asset, especially after major cryptocurrencies such as Bitcoin and Ethereum surged more than 22 % in the first week of Russia's war on Ukraine.
Separated Bitcoin It is the world's largest cryptocurrency away from traditional markets and risky assets amid the conflict between Russia and Ukraine, and this has particularly supported the idea of viewing cryptocurrency as the best safe haven asset as well as a store of value.
Sanctions put the ruble under pressure
Moscow has begun attacking Ukraine and has strained its relations with the West. The Ukrainian capital, “Kyiv” is under intense military attack and explosions were reported. In response to the Russian move, the United States, the European Union, Australia, Japan, Taiwan, Canada and other Western allies announced tougher sanctions against Russia.
The European Union has reported imposing sanctions on more than twenty Russians, including the press secretary of President Vladimir Putin. These sanctions have been imposed against the oil oligarchs, Kremlin officials, publicists, military figures and bankers who play influential roles in supporting Moscow's economy.
Severe sanctions have put huge pressure on the Russian ruble, bringing the exchange rate of $1 to 110.74 rubles against 77 rubles on February 20, so many may hurt cryptocurrencies in order to get around the sanctions.
Ukraine seeks cryptocurrency donations
Ukraine, which ranked 4th in the “Chinalysis’ 2021 Global Crypto Adoption Index” data platform, is raising donations for support during the war in the form of Bitcoin, Ethereum, Ether, and ether.
Ukrainian Deputy Prime Minister Mikhailo Fedorov also tweeted with wallet addresses for fundraising amid the Moscow attack. It is believed that $43 million in digital currency has already been donated to the Ukrainian government and NGOs since Beginning of the Russian invasionThe Kona Crypto Exchange (the largest digital exchange in Ukraine) saw its daily trading volume more than triple to 150 million hryvnia ($5 million).
Growing popularity as “digital gold”
According to a report published by Bloomberg Agency, Bitcoin is becoming seen as an alternative to the traditional safe investment “gold.” Some analysts are also expecting to see intense competition between both assets in the near future, according to market analysts, it may soon be observed that retail investors are increasingly interested in Bitcoin as a form Forms of digital gold.
Commenting on the idea, the report also stated that Bitcoin “has properties similar to gold, if you own it you directly control the assets unlike the governments and banks that are in between”, at a time when banking services are being shaken in a region which is clearly happening in Europe at the moment, It would make sense to see some inflows into bitcoin as people diversify their money away from the banking system.
Does Bitcoin Work as a Safe Haven?
Cryptocurrency proponents argue that the Russian-Ukrainian war will be a game-changer for cryptocurrencies. During times of ongoing war, digital currencies served as a store of value as well as allowed for fast and cost-effective digital transactions. These troubled times have highlighted the shortcomings of the traditional financial system and the role of currencies. encrypted as its cure.
In this regard, many market experts commented that in times of heightened uncertainty and tension we have seen a slight uptick in Bitcoin and other cryptocurrencies, and it goes without saying that the specific characteristics of Bitcoin allow it to function as a safe haven during turbulent times.