Cryptocurrency prices are climbing after Russia's ruble sank to another record low and Moscow was hit with new sanctions.
Other cryptocurrencies moved higher, too. Ethereum climbed 10% Tuesday to reach $2,878. Dogecoin rose nearly 6% to about 13 cents apiece.
Virtual currencies are traditionally seen as a risky bet, but as conventional assets experience curbs or greater volatility because of geopolitical tensions, some analysts believe they will gain more traction.
According to Arcane Research, an Oslo-based cryptocurrency research firm, the trading volume between ruble and cryptocurrencies has spiked in recent days on Binance, one of the world's biggest cryptocurrency exchanges.
Financial sanctions are easier than ever for Russians to evade. Thank Bitcoin
Financial sanctions are easier than ever for Russians to evade. Thank Bitcoin
Investors appear to be "trying to get out of the ruble" due to its "drastic devaluation after all the sanctions," said Bendik Schei, head of research at Arcane.
Bitcoin ‘watershed’ moment?
Over the years, bitcoin proponents have touted the cryptocurrency as “digital gold,” an asset that provides a safe haven for investors during times of turmoil or even as a potential hedge against inflation. But bitcoin has not performed that way. Instead, it has been more correlated to the movement of stock prices, even as inflation continues to hit multi-year highs and a military conflict plays out. That case for bitcoin as digital gold has unraveled in recent weeks.
Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, said that could be changing.
“Bitcoin and cryptocurrencies are arguably having their watershed moment against backdrop of global uncertainty and tension related to the Russia-Ukraine crisis,” Ayyar told..
“Crypto is decoupling from traditional markets and can be clearly seen in the performance.”
People have been donating cryptocurrency to the Ukrainian army too, “proving that crypto is fundamentally a technology that cannot be ignored,” Ayyar added.
He also said that a bottom for bitcoin was already forming as the war was getting underway.
Michael Rinko, venture associate at AscendEx, told CNBC on Monday that $38,000 was a key level for bitcoin.
“More people bought at $38,000 than at any other level above or below for a good margin,” he said.
However, Bitbank’s Hasegawa warned of further volatility ahead.
“There still are a lot ... of potential risks up ahead for the market, like the Russia—Ukraine negotiation falling apart, even more huge air strikes on Ukrainian cities, nuclear threats, and U.S. jobs report on Friday, so it looks like the next couple of days are going to be a wild ride for bitcoin,” Hasegawa said.
