Over US$250 million was wiped out of crypto market after Russian President Vladimir Putin forged ahead with his invasion of Ukraine, but prices rebounded after US President Joe Biden spoke yesterday afternoon.
What happened: The invasion caused markets to plummet and investors to stash their cash away in “haven” investments like gold. Crypto suffered as investors fled assets perceived as riskier, but rebounded yesterday afternoon, with Bitcoin and Ethereum finishing the day up slightly.
Meanwhile, crypto bigwigs are airing their grievances with Putin’s government.
- Ethereum founder Vitalik Buterin tweeted, “Reminder: Ethereum is neutral, but I am not.”
- Buterin also criticized Putin’s decision in a tweet written in Russian, saying it’s a crime against the citizens of both nations and wishing glory for Ukraine.
- Sam Bankman-Fried, CEO of trading platform FTX, explained via Twitter thread why crypto prices are fluctuating right now but hit the nail on the head when he said people are selling off Bitcoin and other cryptos “to pay for war.”
- Barry Silbert, CEO of Digital Currency Group, said what we’re all thinking when he tweeted “F*ck War.”
Why it matters: Western countries often rely on economic sanctions as punitive measures. They didn’t deter Putin from invading Crimea in 2014, and they don’t seem to bother him now. Experts speculate that cryptocurrency has enabled governments like Russia to develop a “parallel financial system” with crypto.
- Bloomberg reported that Russians hold 12% of the world’s cryptocurrency, valued at roughly $200 billion.
- If Russia has enough crypto capital to skirt around sanctions imposed by NATO partners, it’s just a matter of building the tools to access and use it as payment; the digital ruble will allow Russia to trade with any country that accepts crypto.
Big picture: As a relatively new asset class, it remains to be seen how crypto will weather major global conflict. So far it’s been volatile, but that’s not anything new, is it?