Bitcoin surges above $44,000 as demand surges for safe-haven assets

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Bitcoin continued to rally on Tuesday, briefly trading above $44,000 for the first time since Feb. 17, amid growing signs that the war in Ukraine is bolstering demand for cryptocurrencies.

The biggest cryptocurrency rose 6% to $44,183 and traded at $43,400 as of 12:54 p.m. in Hong Kong, gaining along with other major digital tokens.

Bitcoin has surged since the Russian military offensive in Ukraine, backed by people in those countries who seek to store and transfer money in anonymous, decentralized cryptocurrencies.

Trading in Russian ruble-denominated bitcoin gained momentum as the offensive began on Thursday, with daily volumes up 259% from the previous day to 1.3 billion rubles ($13.1 million). dollars), according to data from CryptoCompare.

In Ukraine, meanwhile, cryptocurrency exchange Kuna saw its daily trading volume more than triple to 150 million hryvnias ($5 million).

Bea O’Carroll, managing director of Radkl, a digital asset investment firm, said war and Western sanctions have seen a trend emerge to use Bitcoin to transfer value.

“Basically, having a currency that’s not controlled by the government, that’s not affected by emergency acts…it’s really interesting,” she added.

“Maybe that’s how Russia gets its value. Also, on the other side, there was ‘this is how people are going to get value for Ukrainians’.”

In the five days since Russia’s offensive in Ukraine on Feb. 24, Bitcoin is up 13%, while the US stock index S&P 500 that it often mimics is up around 2% and the Security’s traditional gambling gold is now largely stable after gaining as much as 3.5% on the day of the invasion.

Basically, having a currency that is not controlled by the government, that is not affected by emergency acts… it’s really interesting

Bea O’Carroll, Managing Director of Radkl

On the day of the attack, around $300 million in short Bitcoin positions were liquidated, according to data from Coinglass, while Singapore-based QCP Capital said “a good chunk” of long positions effected leverage had been removed.

In addition to being largely anonymous, cryptocurrency holdings and transactions are often held in wallets on decentralized platforms accessible from anywhere.

“Bitcoin could be a potential safe haven for Russian oligarchs avoiding sanctions as there will be no censorship on the Bitcoin network and on cryptocurrency transactions,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

“Cryptocurrencies could act as a powerful store of value for a large portion of assets that don’t need to be liquid.”

Still, for cryptocurrency fans, the fact that such holdings could offer a way around sanctions could be a double-edged sword.

“This could lead to regulations by NATO countries against the use of cryptography, but the flip side is that there could be wider adoption in places with geopolitical unrest,” he said. said Katie Talati, head of research at Digital Asset Manager Arca.

Ukraine also quickly spotted an opportunity in the reach and anonymity of the cryptocurrency world.

Deputy Prime Minister Mykhailo Fedorov tweeted Bitcoin and Ether wallet addresses, along with a plea: “Support the people of Ukraine. Accept cryptocurrency donations now.”

Fedorov’s government and Ukrainian non-governmental organizations raised more than $22 million in cryptocurrency after the calls, according to blockchain analytics firm Elliptic.

Although bitcoin could become a currency of choice in geopolitical risk areas, market participants warn that there are differing views on whether it can more broadly become a “safe haven” asset, a form of digital gold.

For Zach Friedman, co-founder of cryptocurrency brokerage Secure Digital Markets, Bitcoin’s post-military offensive gains serve to enforce the “narrative around its store of value in turbulent times.”

As of Friday, stablecoin transactions accounted for more than 83% of the cryptocurrency market’s total 24-hour trading volume, according to CoinMarketCap.

USD Tether, the largest stablecoin saw its market cap soar to an all-time high of nearly $80 billion, while gold-backed cryptocurrency PAX Gold added nearly $100 million to its market cap in two days.

Updated: March 01, 2022, 08:04