The rave behind Bitcoin has been massive. Since its launch in 2009, the worth has increased beyond imagination. The price of Bitcoin surged from $0 in 2009 to hit a peak of $60,000 in April 2021. However, despite this, Bitcoin is highly volatile like every other cryptocurrency. Thus, its value changes constantly. Also, although it is a digital asset, it is influenced by real-life events that affect conventional markets. One of such events is the Russia-Ukraine crisis that recently broke out.
Background on the Russia-Ukraine Conflict
Tensions arose arisen between Russia and Ukraine as far back as 2014. During the initial eight years of the conflict and until 2022, the tensions resulted in Russia taking over Crimea, which was a part of Ukraine. both countries also held other intense conflicts subsequently. However, the conflict came to a height on the 24th of February, when Russia fully invaded Ukraine.
According to reports, the primary reason for the conflict is that Vladimir Putin, the President of Russia, has declared that Ukraine’s act of joining the North Atlantic Treaty Organisation (NATO) has threatened Russia’s safety. Since the invasion, many lives have been lost, and properties have been destroyed.
How is the Bitcoin Market Faring?
Like every other investment asset, the Russia-Ukraine conflict has affected the Bitcoin market. Bitcoin’s value reduced by about 6% in the second week of the conflict. On the flip side, the war seems to have driven a higher usage of Bitcoin. For example, Ukraine recently received about $100 million in cryptocurrency donations. However, quite interestingly, since the early break out of the war when crypto donations were on the rise, Bitcoin’s trading volume has remained flat. It has also experienced a steady decline over the past few weeks.
There have been speculations that many investors are choosing to hold off on trading due to concerns that Bitcoin may be too risky. However, the crypto community seems to be divided as there are equally reports that Bitcoin is serving as a shield against inflation at this critical time.
What the Russia-Ukraine Conflict Means for Bitcoin Regulation
General cryptocurrency regulation has been a trending topic for many years. National governments are increasingly attempting to regulate cryptocurrency activities, especially within the context of financial crimes, which are often carried out with crypto. In addition, the Russia-Ukraine conflict may increase calls for cryptocurrency regulation.
This is because Russia is facing grave sanctions across the global market due to its invasion of Ukraine. However, many wealthy Russians are opting to move their funds towards Bitcoin to protect them against the full force of the sanctions. Due to this, many countries like Ukraine are calling for crypto exchanges to restrict the accounts of Russians. However, some exchanges have declined.
This tough spot has led to increased calls for cryptocurrency activities to be regulated. Essentially, even with the existence of tough sanctions in the conventional market, it will barely be felt by the Russian government if cryptocurrency remains an alternative for them. Already, Russia, the major party in the current crisis, has made a move to create a legal framework regulating cryptocurrencies. This move has sparked international reactions, as there are reports that international cryptocurrency policies are set to be released in response to Russia’s crypto regulation.
Evidently, many other effects are in store for Bitcoin as the Russia-Ukraine war continues. However, it emphasizes the need for Bitcoin investors to be particularly cautious about their investment choices at this time.