Why Was Bitcoin Up 15% Today, Topping $40,000?

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While there's no definitive answer, here are some factors that could be spurring the crypto market higher.

Key points

  • Top cryptocurrency Bitcoin was up as much as 15% over the past 24 hours, despite running below the key psychological threshold of $40,000 for the past 10 days.
  • Sanctions against Russia for its invasion of Ukraine could be driving Russian citizens to buy crypto as a way to survive the current conflict, which has already caused the Russian ruble to crater more than 30%.
  • The Russian Federation ranks 18th in global crypto adoption, according to Chainalysis.

Bitcoin, the top cryptocurrency by market capitalization, has gained 15% as of 5:30 p.m. EST Monday, surpassing $43,000. While there's no clear answer as to what's driving the price today, there are shifts in market sentiment and fundamentals that may have contributed to the rise, particularly as they relate to the unprovoked invasion of Ukraine by Russian government forces.

Economic sanctions against Russia

Global outrage over the Russian invasion of neighboring Ukraine has led to a rapid and widespread cascade of economic sanctions against Russia.

Additionally, Western nations have frozen assets of several Russian banking systems to prevent asset transfer using the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network. These moves have further isolated Russia economically, causing its national currency, the ruble, to fall more than 30% -- to less than a penny -- in a single day.

Media reports state that Russian citizens are standing in lines for hours to withdraw their money from banks and put them into other assets -- mainly the U.S. dollar. It's possible that many Russians seeking a safe haven for their assets are turning to Bitcoin, too.

Russian citizens already hold $23.9 billion worth of Bitcoin

According to a Wall Street Journal article citing a Russian government report, Russian citizens have 12 million cryptocurrency wallets set up, and those digital wallets already hold an estimated $23.9 billion in crypto. That same article also noted that Russia is the third-largest country in the world in terms of Bitcoin mining. It's reasonable to assume that Russian citizens may be moving their depreciated Russian currency into Bitcoin and other cryptocurrencies to serve as a store-of-value hedge against their government's reckless invasion of a sovereign nation.

Russian adoption of cryptocurrency is likely to increase

According to the 2021 Chainalysis Global Crypto Adoption Index, the Russian Federation ranks 18th in the world in uptake of Bitcoin and other cryptocurrencies. There is every reason to believe that the conflict the Russian government started will drive crypto adoption within that federation to all-time highs as its citizenry tries to survive the specter of war any way it can.

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It's not clear whether crypto exchanges will prevent individuals from converting rubles to crypto, but the very nature of decentralized exchanges means they will likely allow those transactions.

If you're considering any investment in crypto, always do your own research, especially during challenging times such as these, and only invest what you can afford to lose.

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