Bitcoin and other cryptocurrencies soared Tuesday as the U.S. and other nations impose sanctions on Russia over its invasion of Ukraine.
Bitcoin was up 16.8% to $44,527 at last check, according to CoinGecko, while ethereum jumped 15.2% to $3,024 and dogecoin rose nearly 10% to $0.136406.
'A Cascade of Sanctions'
The U.S and Europe announced the exclusion of several Russian banks from the SWIFT network, referring to the Society for Worldwide Interbank Financial Telecommunications.
The society is a consortium financial institutions worldwide use as a crucial communications line for global commerce.
The ruble fell about 30% against the dollar Monday — making it worth less than 1 U.S. cent.
"The intrinsic value of bitcoin is now in full display on the whole world," Nayib Bukele, president of El Salvador, said on Twitter.
Thomas Westwater, analyst at DailyFX, noted that bitcoin had cleared "above the 40,000 psychological level."
"The cascade of sanctions being piled onto Russia from the United States and its allies, including the removal of major Russian banks from the SWIFT messaging system, has effectively marooned the Russian banking system from the global financial markets," Westwater said, "casting doubt on Russia’s financial ability to weather the economic penalties. The Russian Ruble tumbled further against the Greenback overnight, with USD/RUB rising more than 20%."
'A Way to Get Out of the Ruble'
The sharp rise in bitcoin and other cryptocurrencies comes amid a significant uptick in trading volumes in Russia’s Ruble and Ukraine’s Hryvnia, Westwater noted, citing data firm Kaiko.
"Russian oligarchs and others who fear being impacted by the sanctions may be fleeing to bitcoin, given its perceived insulation from the traditional financial system," he said. "Ukraine’s Vice Prime Minister, Mykhailo Fedorov, requested major exchanges to restrict users with a Russian address on Monday."
Nicholas Cawley, strategist at DailyFX said that "the move higher in bitcoin has seen tough resistance at $39.6k taken out with ease, and now sets up BTC for a run at the next zone of resistance between $45.5k and $45.8k."
"Given the situation in Russia, it is likely that many Russian citizens and possibly even their banks are moving to bitcoin as the ruble crashes," said Rance Masheck, CEO of iVest+. "Keep in mind that while the ruble is down considerably since last week, the Central Bank is still supporting it and propping it up, so there is concern in Russia that it will fall further."
Masheck said that moving to cryptocurrencies is "a way to get out of the ruble and put their money in a secure digital system that can be used around the world."
'Unite Against Evil'
At the current price level of around $44,000, he added, "bitcoin's market cap now exceeds the Ruble by over $100 billion."
"This is what happens when democracies across the world unite against evil," U.S. Senator Amy Klobuchar tweeted, referring to the ruble's slide.
Edward Moya, senior market analyst for the Americas with Oanda, said that Western allies are delivering "harsher sanctions and restrictions on Russian banks and that is bolstering the argument for blockchain products that will compete with the SWIFT network."
"Bitcoin and all the top altcoins are rallying today as investors realize the likelihood of massive investments into DeFi following the latest round of Russian sanctions," he said. "The White House and Treasury are also looking to make it harder for Russians to use crypto to get their money out of Russia."
Moya said the fact is that some Russians have already done that and "now they will be stuck 'hodling' until sanctions are removed, because they don't want to risk getting caught and losing their entire crypto investment."
