Actionable Insights: Bitcoin proves its mettle during Russian financial turmoil
March 2, 2022 | Anastasia Amoroso | iCapital
A pivotal geopolitical moment may also have been a pivotal one for the cryptocurrency ecosystem. Under pressure from governments, cryptocurrency platforms stood firm as independent, decentralized, and safe from central authority interference.
The period we are living through now is going to be remembered for a long time. And there is a good chance it will be seen as a significant geopolitical inflection point. Last week we wrote how Russia’s invasion of Ukraine will spur: the country’s financial isolation (unless the regime drastically changes); a major acceleration of measures to improve energy security, via investments in both clean energy and domestic oil and gas production; and a sharpened focused on cybersecurity. This week another secular shift is in the making—the testing and validation of Bitcoin as a haven.
Here is how. On the back of Russian President Vladimir Putin’s actions, the ruble lost 27% of its value from last Thursday to this Tuesday1, Standard & Poor’s cut Russia’s credit rating to junk2, the country’s default probability rose to 56%3, and there were queues to get money out of Russia’s banks. Unfortunately, reports suggest that some forex ATMs exhausted their supply of foreign currency.4 Mr. Putin issued a presidential decree banning residents of Russia from transferring foreign currency to accounts opened with banks located outside the country’s territory effective March 1.5
Amid this turmoil, Bitcoin rose nearly 15% from Monday morning to Tuesday afternoon.6
