Bitcoin defied a stock market slump on Monday, surging 9.3% amid what analysts said was increased demand from Russian and Ukrainian buyers.
The world’s most popular digital currency was trading around $41,200 on Monday afternoon, while ethereum was up 7.3% at $2,800.
The surge can be explained in part by Russians flocking to escape the ruble, which has tanked due to crippling sanctions from the US and European Union, according to Marc van der Chijs of First Block Capital.
Van der Chijs said he had seen bitcoin selling for as much as $46,000 on some Russian exchanges on Monday — a roughly $5,000 premium over its US price.
“There’s not normally a difference [between the Russian and US price of bitcoin] because there are arbitrage possibilities,” van der Chijs told The Post. “That seems to indicate that this urge in bitcoin price is because of Russian buying.”
Russians worried about the stability of their currency and financial system may see bitcoin as a way to protect their savings, he said.
Conversions between bitcoin and both the Russian ruble and Ukranian hyrvnia spiked to their highest levels in months immediately after Vladimir Putin ordered the invasion last week, according to data released Monday by Kaiko Research.
“We see some evidence of an increase in bitcoin-ruble volume,” Blockchain.com research chief Garrick Hileman told The Post, cautioning that it was unclear if Monday’s price movements could be completely attributed to such trades.
“There’s certainly a big uptick there compared to what the norm was historically,” said Hileman, who’s also a visiting fellow at the London School of Economics. “Is it significant enough to kind of move the price to this degree? Can’t say.”
Hileman added that bitcoin’s surge could also potentially be attributed to people converting fiat into cryptocurrencies in order to donate to the Ukrainian military and Ukrainian charities, which have raised more than $22 million in crypto over the past five days, according to data from crypto compliance firm Elliptic.
It could also potential be due to non-war-related factors like a short squeeze, he said.
“It’s very hard to make a clear interpretation here,” he said.
Many major crypto exchanges including Coinbase and FTX do not operate in Russia. Therefore, many Russians have turned to Cayman Islands-based Binance, which is the world’s largest crypto exchange and offers trades between the ruble and bitcoin.
After Ukraine’s vice prime minister Mykhailo Fedorov called on crypto exchanges on Sunday to block Russian users, Binance refused.
“We are not going to unilaterally freeze millions of innocent users’ accounts,” a spokesperson for Binance told CNBC. “Crypto is meant to provide greater financial freedom for people across the globe. To unilaterally decide to ban people’s access to their crypto would fly in the face of the reason why crypto exists.”
Cryptocurrencies fell in tandem with stocks last week when Russia initially invaded Ukraine but have since outperformed. Bitcoin is up 10.8% over the past five days, while the Dow Jones Industrial Average is down 1.0%.