Edited by Christian Thompson
When the value of national currency plunges into the abyss and ATMs stop working, where do you turn? In the Russia-Ukraine conflict, the answer from the governments and people on both sides is simple - crypto. While crypto had a rocky start in the region with a ban by the Ukrainian government and conflicting stances from the Russian government in recent months, war is expensive - and digital currencies may be an answer.
Russian oligarchs pour savings into Bitcoin
As sanctions tighten and the SWIFT ban targets major Russian banks, those with wealth within the country have turned to crypto, specifically Bitcoin and stable coin Tether, to move money out and protect their assets. The transaction rate from Rubles to Bitcoin skyrocketed 16% higher than the global average, and Tether reached an 8 month high as Russians scrambled to transfer funds to more stable digital currencies.
Part of this is largely driven by the upper-crust of Russian oligarchs. While Russian oligarchs have been quietly transferring funds into crypto for a while, they have now been forced by the plummeting price of the Ruble and tightening sanctions to move wealth quickly. Oligarchs have already collectively lost a staggering $32 billion since the start of the year and are likely scrambling to cut their losses before it’s too late. Our signal picked up a spike in conversation around the price exchange starting in January and accelerating in recent days, set to level off as wallets are potentially pressured by the US government to block the access of all Russian accounts, not just the blacklisted ones.
Transferring wealth into Bitcoin wallets is not without its risks for high-profile oligarchs - the Ukrainian government has begun offering bounties to people who dox Russian and Belarusian wallets.
Ukrainian crypto aid
As news and media pour out of the Ukraine on horrific tragedies and human rights abuses, Twitter users sought out ways to support those in the conflict, leading to the Ukrainian government releasing wallet addresses for Bitcoin, Ethereum, Tether, and most recently Polkadot. More than $20m has already been sent in digital currencies to the Ukrainian resistance, more than half of which has already been spent on supplies for war and relief efforts. Our signal picked up this momentum across social media and the conversations surrounding crypto aid are up almost 650% since December. Part of these funds may even be going to Russian soldiers who raise the white flag - Ukraine has promised that surrendering military personnel will receive the equivalent of $45,000 in digital currency for laying down their arms. While military aid to the war-torn country from the US in the past year dwarfs the amount Ukraine has collected via wallets posted on Twitter, the crypto donations are nonetheless vital in funding its immediate relief and military efforts and bring up important conversations about crypto’s role in the future of warfare.
The big crypto players
Three big tokens have dominated the conversation during the Russian invasion; Bitcoin, Binance, and Tether.
Bitcoin (BTC) continues to be the default choice, and as a result of the huge influx from oligarchs, the price is up 17% this week to almost $44,000 at the time of publishing. Ethereum, the silver standard of crypto, is also up this week to almost $3,000. We’re very bullish on Bitcoin, with some speculating that this could represent a full recorrection with prices potentially reaching up to $55,000 in coming weeks. Conversations surrounding Bitcoin in the context of the Russian conflict are up 1,739% since the start of the year, with a largely negative tone, reflecting uncertainty of the digital currency as a means of oligarchs evading sanctions and its role in the conflict.
Tether (USDT), meanwhile, is establishing itself as a safe haven for funds. Tether is a stable coin for the USD, meaning 1 Tether is equivalent to 1 USD. It gained a foothold in Russia when Chinese importers switched from Bitcoin to Tether when sending money from trades back to China, and it’s now further establishing itself as the dominant stable coin and currency of choice for protecting assets long-term.
Binance (BNB) is also emerging as a surprisingly influential player in current conversations. Binance has refused to block Russian accounts (besides those specifically blacklisted under the sanctions) and has allowed Russian and Ukrainian users to continue trading on its platform. One of the only wallets accessible in the region (besides some locally focused exchanges such as Kuna and other smaller players in the space), NWO.ai saw conversations surrounding the exchange in the context of the conflict up 3,474%, skyrocketing thousands of points in the past few days, driven by key moments of conflict our AI picked up. BNB, Binance’s token, is also up almost 12% in the past 5 days, and we anticipate Binance will only continue to establish itself as a go-to exchange for international crypto transactions.
While the limitations on wallets and increasing conversation around banning Russian accounts likely means that the significant amounts of wealth flowing out of the country will taper in the coming weeks, the impact on the tokens and exchanges involved are already being felt according to our signals - perhaps leading to the crypto market rebound we’ve been waiting for. Either way, crypto is establishing itself as a major asset for both sides of the conflict and is set to change the future of funding warfare.
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Disclosure: NWO.ai does not have a position in any equities, commodities, or cryptocurrencies mentioned. Nothing contained in this website should be construed as financial advice.