The Russian invasion of Ukraine in the early hours of Thursday has led to the decline of various crypto prices. Cryptocurrencies are affected by the Russian invasion due to the tumbling in the global equity market, it is often correlated to movements in other risk assets such as stocks.
Cryptocurrencies affected by the Russian invasion
The world’s most valuable cryptocurrency – Bitcoin – fell below $40,000 over the weekend, and has continued to slide as the Ukraine crisis intensifies. Other cryptocurrencies were also affected by the Russian invasion as Ethereum tumbled more than 12% while dogecoin was down more than 14%. Anto Paroian, Chief Operating Officer at digital asset investment fund said; “The prospect of geopolitical escalation has been the main driver of price moves in the broader risk asset spectrum for the past couple of weeks.”
According to market tracker CoinMarketCap, the total crypto market lost $160 billion of value in the past 24 hours, plunging 10% since the Ukraine invasion began. Vijay Ayyar, vice president of corporate development and international at a crypto exchange, Luno, said; “Risk assets continue to be weighed down by the Russia-Ukraine conflict and tensions. This includes Bitcoin and cryptocurrencies which are currently still very much viewed as a high-risk asset class.”
Russia could use digital currencies to mitigate sanctions
Since Russia invaded Ukraine most of the countries warned Russia of sanctions. The US and EU sanctions rely heavily on banks to enforce the rules. If a sanctioned business or individual wants to make a transaction denominated in traditional currencies it’s the bank’s responsibility to flag and block those transactions. But digital currencies operate outside the realm of standard global banking, with transactions recorded on the blockchain. Ross S. Delston, an expert on anti-money laundering compliance said; “If the Russians decide — and they’re already doing this, I’m sure — to avoid using any currency other than cryptocurrency, they can effectively avoid virtually all of the sanctions.”