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Ethereum and Terra are rallying behind Bitcoin in the latest upsurge in crypto prices
Russia-Ukrainian war seems to have no bearing on the cryptocurrency market. Prices of major cryptocurrencies including Bitcoin and Ethereum have soared to a new high. Though these cryptos were down in February 2022, they have picked up pace in March. Since Monday, Bitcoin has gained 18% reaching the US$45K mark. Following the Bitcoin surge, altcoins like Ethereum and Terra bounced back after they hit a low during the onset of the Russia-Ukrainian war.
The crypto market was under global scrutiny in the beginning when Russia and Ukraine started to bank on crypto-currencies in the face of a financial embargo. They used Bitcoins and altcoins as alternative to traditional currencies. While Russia is bypassing US sanctions by leveraging the cryptocurrency market, Ukraine is finding its financial solace in donations collected in the form of cryptocurrencies. Till date it could collect US$36 million worth of cryptocurrency funds to help its citizens meet basic needs. Consequently, there is a spike in demand for cryptocurrencies leading to sudden surge in their value. Ethereum, the second largest cryptocurrency after Bitcoin, with 15% price gain, reached US$2,909. Other altcoins like Shib Inu, Polkadot have also registered significant growth in the last few days. Though the sentiment is positive, there is no certainty over how long this streak with continuing till the war ends.
As Russian and Ukrainian governments are heavily relying on cryptocurrencies, state-owned companies and elite families are also investing in Bitcoin and other altcoins to escape the perils of sanctions. Though the exact reason why cryptocurrencies are witnessing a sudden surge is unclear, experts are of opinion that Bitcoin’s race is short-lived and its true value will be apparent only in an apolitical and trustful environment.
Bitcoin’s surge is momentary
The growing geopolitical ruins have exposed the fault lines in the traditional financial system. Although it is good to some extent as Russia might not be able to make money movements across the world, they are getting a stronghold on the global economy through cryptocurrencies. Besides, Russia is trying its best to stop people from stepping off its financial circle. The Central Bank of Russia has raised interest rates to 20% to attract deposits and is preventing foreigners from selling securities.
Currently, Russia is positioned as the 18th country in cryptocurrency adoption. But the war tension could make people invest more in Bitcoin and Ethereum and help the country move towards the top positions. According to experts, Russia relying on cryptocurrencies is a pre-planned thing. Generally, the cryptocurrency market works in anticipation of an event. Similarly, the war was anticipated and the increasing adoption has caused high volatility.
Why do macro changes matter?
With the traditional ecosystem failing to withstand, Bitcoin will fare well in a short timeframe. But experts warn that macro changes in the geopolitical situation and the financial market could put the cryptocurrency to test.
Bitcoin is a decentralized token
The whole motto of cryptocurrencies is to remain decentralized and not be shaken by geopolitical or economic happenings across the globe. Some analysts are also continuously pressing the point that even though Bitcoin’s value is high now due to the Russia-Ukraine war, the situation won’t stabilize its price. Then what exactly fixes bitcoin’s value?
- Its nature of existence and disconnect from the global happenings gives singularity to Bitcoin. Since it is not owned by a company or is regulated by a government, BTC has escaped every attempt at the ban over the past decade.
- Although people can view every transaction and verify them, nobody can hack, counterfeit, or change it. The security of Bitcoin is a major aspect that triggers its reliance.
- Unlike traditional financial assets, Bitcoin is borderless. All you need is an internet connection and a Bitcoin wallet to transfer funds from one country to another.
- The scarcity of Bitcoin and the growing demand is a matter of consideration. Already over 18 million out of the 21 million Bitcoins is in circulation. Therefore, the demand keeps growing as more people mine them.
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