As tensions between Russia and Ukraine intensified on Tuesday, cryptocurrencies took a beating, with Bitcoin trading at $36,649, representing a 24-hour plunge of nearly 6.5%. On Tuesday, President Joe Biden said that Moscow would face severe sanctions for “a “Russian invasion of Ukraine,” after President Vladimir Putin mobilized forces in breakaway regions of the country.
Geopolitical tensions in Ukraine and interest rate hikes by the Fed have caused Bitcoin to lose nearly half its value since reaching a high of $68,990 last November.
According to Chainalysis, Ukraine is fourth worldwide on the Global Crypto Adoption Index, making it one of the largest source countries for crypto investors. Each year, approximately $8 billion of cryptocurrency enters the country, and some experts believe that number is estimated to rise in the wake of more political tremors.
Ukraine-based Coinweb blockchain developer Maksym Surzhynskyi told The Street Crypto that many Ukrainians were increasingly looking to cryptocurrencies to reduce their financial risks: “Storing wealth in decentralized, permission-less networks like Bitcoin can help people in desperate circumstances evade danger while still being able to access their money,” Surzhynskyi said.
“Because the adoption of crypto is already relatively high in countries like Ukraine, more and more people will turn to Bitcoin and other crypto assets to safeguard their wealth,” Josh Goodbody, Chief Operations Officer at network of digital asset tools Qredo told The Street Crypto. “Indeed, all you really need is a memorized seed phrase for your Bitcoin wallet, and then you can flee to any destination in the world and still access your money,” Goodbody added.
Surzhynskyi said that Ukrainian access to banks remains uncertain, but cryptocurrency provides a way to weather political crises and protect wealth. “Networks like Bitcoin can be helpful in the event that cyberattacks take banks and other financial institutions offline,” he added, pointing out that Bitcoin’s security — and lack of hacks — proves it may be more a secure financial network than traditional financial systems.
“Crypto is not the end-all-be-all solution here, but.. we are seeing some evidence of people turning to this new technology as a hedge against instability,” Surzhynskyi said.
“Ukrainians are already savvy when it comes to crypto assets, and I have no doubt that many of them are turning to this technology to ensure that they can maintain access to their money,” Justin Newton, CEO of regulatory blockchain technology provider Netki, told The Street Crypto.
“Owning Bitcoin and other crypto assets can help people get around situations in which bank accounts are either inoperable due to political turbulence or deliberately cut off by authorities,” Goodbody told The Street Crypto.
Newton pointed out that even if Bitcoin, Ethereum and other crypto assets face a massive sell-off, this does not mean that the strength of these networks is in question. “These networks are as robust as they have ever been,” Newton said. “And I am hopeful that, even in the event of more sell-offs, crypto can provide added security to those who are on the ground.”
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