Bitcoin Rises as US Imposes Additional Sanctions Against Russia
Bitcoin made a turnaround following the announcement of further financial sanctions against Russia on Feb. 28, jumping 14% in the past 24 hours. The crypto had initially taken a hit when Russia first began invading Ukraine, re-igniting the debate that it was not as good a hedge and not as uncorrelated to markets as it’s purported to be.
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However, Bitcoin was back up at $44,000 on the morning of March 1, according to CoinMarketCap — a comeback that prompted some experts to say it might be “decoupling from risk assets.”
Mikkel Morch, Executive Director & Risk Management at crypto/digital assets hedge fund ARK36, told GOBankingRates that in percentage terms, Bitcoin recorded the largest daily candle in more than a year, gaining more than 18% day-over-day at the highest point of the rally.
“While it seems that the second leg of the move was at least partially fueled by a small short-squeeze, overall, the rally was driven by a huge spike in demand,” Morch said.
According to Morch, in view of that, yesterday’s rally may have a deeper significance for the Bitcoin use case.
“The biggest crypto asset is now looking at a potential decoupling from risk assets and it is doing so at a time of unprecedented uncertainty. Cash used to be king in times of crisis but now rising inflation levels and broader macroeconomic woes make holding large amounts of cash risk in and of itself,” Morch said.
“Are we, therefore, seeing the beginnings of a wider acceptance of Bitcoin as a hedge — not only for investors but also for ordinary citizens? We will know for sure on the other side of this crisis, but we can already say that we’re currently witnessing historical power shifts taking place in real time — and crypto is at the very center of the raging storm.”
On Feb. 28, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) prohibited United States persons from engaging in transactions with the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation, according to a Treasury press release. This action effectively immobilizes any assets of the Central Bank of the Russian Federation held in the United States or by U.S. persons, wherever located.
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In addition, as directed by President Biden last week, OFAC sanctioned a key Russian sovereign wealth fund, the Russian Direct Investment Fund (RDIF), with exposure to the United States financial system and its Chief Executive Officer (CEO), Kirill Dmitriev — a known Putin ally, the release added.
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