Bitcoin proves sanction breaker for Russia

Recent sanctions against Russia have pushed up the price of cryptocurrencies as Moscow seeks to shore up its finances and stabilize its economy.

When the Ukraine invasion began last Thursday, Bitcoin (BTC-USD) trading in the Russian rouble went into overdrive, with daily volumes increasing about 260 percent from the previous day to 1.3 billion roubles (£9.2 million, $13.5 million), according to CryptoCompare data.

The coin is now worth $44,100 (£33,100) after gaining nearly 20% on Tuesday, its biggest daily gain since February 2021.

Some analysts predict that the Bitcoin price will reach $50,000 by the end of this month, owing to rising geopolitical tensions and increased institutional investment.

Bitcoin, which was trading alongside risk assets just a few days ago, is now the asset on which Russians and Ukrainians rely to get their funds out of the traditional system.

The ability to transact value in bitcoin also allows Russian oligarchs to avoid Western sanctions. It may also assist Russian companies and even the Russian central bank in moving funds, as these entities no longer have access to US dollars and the majority of Russian banks are no longer members of the SWIFT system.

The Russian ruble is currently trading at 107 per dollar. The Moscow Exchange is closed for the third day in a row, amid fears of a market collapse as Western sanctions wreak havoc on the Russian economy.

It is the most extended stock and derivative market shut down since October 1998.

The United Kingdom, the European Union, the United States, and Canada have targeted Russia’s $640 billion (£478 billion) in foreign currency reserves. According to analysts, cryptocurrencies could serve as an alternative medium of international exchange to the dollar, bypassing banking systems.