It’s been a wild and wacky day in the crypto world. On Tuesday morning, most cryptocurrencies were up for the 24-hour period, with top tokens Bitcoin ( BTC 0.89% ), Ethereum (ETH 0.21% )and Dogecoin ( DOGE -0.52% ) each increasing at certain points by double-digit percentages. Although these tokens gave up some of their gains, as of 11:15 a.m. ET, Bitcoin, Ether, and Dogecoin were still higher by 7%, 5.1%, and 3.8%, respectively, over the previous 24 hours.
This is largely related to the news that cryptocurrencies are facilitating an increase in capital out of Russia. Data released on Monday highlights impressive increases in trading pairs, with volumes in the Bitcoin-Ruble trading pair increasing dramatically. Investors seem to be of the view that Russians and Russian institutions could make much more use of mega-cap cryptocurrencies as their country’s financial system reels from sanctions.
Additionally, Ether has been noted as the top cryptocurrency of choice for those looking to donate to Ukraine’s defense efforts. Over $6 million has been added to Ukraine’s Ethereum wallet, with $4.2 million in bitcoins also finding its way to the Eastern European nation. In total, more than $20 million in donations have been reported so far.
However, on Monday, the US Treasury announced formal crypto rules aimed at limiting the use of cryptocurrencies as a way to evade Russian sanctions.
There’s a lot to unpack here. As decentralized currencies, digital tokens have traditionally been seen as an efficient way for users to transfer money anonymously and across borders. However, given the nature of the sanctions imposed on Russia, the usefulness of these cryptocurrencies and the networks behind them is more evident than ever.
There has also been a lot of talk lately about the relatively high correlations between cryptocurrency price movements and stock markets. Many have given up on the idea that Bitcoin and its peers can act as market hedges during times of volatility. That said, when it comes to geopolitical uncertainties and financial system risks, there may be something to be said for owning investments in this sector.
It will be interesting to see what effect the new crypto rules imposed by the US Treasury will have on crypto exchanges. These regulations, aimed at making it difficult for Russian oligarchs and entities to transfer money overseas via cryptocurrencies, certainly make sense. It remains to be seen, however, to what extent they are enforceable.
For now, the crypto market has another catalyst for bulls to latch onto. Let’s see if this is the start of another extended bull run, or if the downtrend this market has been experiencing for the past few months will soon reappear.
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