The ongoing war between Ukraine and Russia is having significant implications on the global economy. The Russian ruble is in a massive tailspin. Russia’s currency has lost over 30% of its value against the American dollar.
World markets are reacting to crippling economic sanctions levied by Western powers. Major economies in Europe and the United States have imposed a freeze on Russia’s central bank. There are now questions about whether Russia can pay back its financial obligations.
Situations like these are exactly why many investors are opting for crypto use. Investors using cryptocurrency are cutting their ties to government bodies and traditional forms of money.
Read on to learn about the global cryptocurrency market considering the conflict between Ukraine and Russia. Explore topics such as crypto news and demand for cryptocurrency in Eastern Europe.
Is Cryptocurrency in Demand?
The Russian invasion of Ukraine started on February 24th. On this day, Bitcoin was trading for roughly $35,000.
It is now trading at just under $41,000. At its highest point, one week after the start of the war, bitcoin was trading for more than $44,000. Other popular cryptocurrencies such as Ethereum and Dogecoin are experiencing similar price spikes.
What Are the Issues with Traditional Currencies?
In times of war and financial calamity, ordinary people make rash decisions. For example, many people rush the banks and ATMs to withdraw their cash.
This is not an unreasonable action. There are almost 2 million Ukrainian refugees fleeing the war-torn nation. They do not know the next time they will have access to their bank.
Mass cash withdrawals have a significant impact on currency markets. They may yield cash shortages and price fluctuations that harm investors.
Traditional currency markets are also highly speculative. A bad news cycle is likely to have a short-term negative impact on your currency holdings.
Russia and Ukraine are also dealing with credit rating issues. Late last week, Moody’s lowered Russia’s credit rating to junk status.
Analysts cite the effect of global sanctions and uncertainty about whether Russia can pay its debt obligations. Ukraine’s credit rating holds the same status as Russia’s.
Why Is Cryptocurrency Worth on the Rise?
Cryptocurrency is a safe haven during tumultuous times. Bitcoin and other cryptos are decentralized and have no ties to national governments. This means that wars, natural disasters, and other negative outcomes do not have the same ripple effect on cryptos.
Instead, negative news often has the opposite effect. People are seeking the stability of decentralized currency as an alternative to traditional currency.
Cryptocurrency and Ukraine
Cryptocurrency is being used in a positive way to help the people of Ukraine. Donations to the Ukrainian government are flowing. The beleaguered nation has received nearly $90 billion in cryptocurrency and NFT donations.
The donations are being used to provide relief to the struggling citizens of Ukraine, as well as to buy military supplies to support Ukraine's army.
To raise additional funds, the Digital Transformation of Ukraine Ministry is working with two companies to design an NFT collection that could then be sold.
Cryptocurrency and Russia
With the plunge in the ruble, ordinary Russians are turning to Cryptocurrency for financial transactions, and to protect their savings.
While there is a fear that Russian Oligarchs and politicians will use Cryptocurrency to preserve and hide their wealth, the open ledger associated with crypto transactions may prevent that from happening.
Crypto Use and Demand During the Russia-Ukraine Conflict
The value of cryptocurrency has never been clearer. The Russia-Ukraine conflict shows that traditional currency investors are at the mercy of bad news.