Bitcoin and other cryptocurrency prices are jumping following a plunge this week in the value of Russia’s currency — a sign, according to some analysts, that Russian investors are shifting their money out of the ruble as economic sanctions against the country for its invasion of Ukraine take hold.
Bitcoin on Wednesday rose to $44,188 after falling as low as $36,370 last week. Other leading cryptos, including ethereum, ripple and solana, were either flat or saw gains of at least 2%.
Meanwhile, the ruble plunged to a record low against the dollar on Monday, dropping to under 1 U.S. cent, and has hovered there since.
Investors are “trying to get out of the ruble” after its “drastic devaluation after all the sanctions,” Bendik Schei, head of research at Norway-based Arcane Research, told CBS MoneyWatch.
“Under the current market conditions, I’m not surprised to see investors — at least those in Russia — seeking stablecoins,” Schei said. Stablecoins are seen as less volatile than cryptocurrencies because the value of the underlying crypto is fixed to a traditional currency like the U.S. dollar or a hard asset like gold.
Another factor that may be pushing up crypto prices is growing unease among some younger investors about government actions that affect currency prices, including this week’s economic sanctions against Russia.
“There’s an entire young generation, out there, of investors who have for some reason become doubters of government,” said Michael Oliver, chief analyst for financial industry research firm Momentum Structural Analysis. “The Ukraine-Russian thing happening is an example of people thinking, ‘Gee, is my money safe in that bank account?'”
Those investors see crypto as a way to “hide their money” from government control, he added.
Some people are also using cryptocurrency to donate money to Ukraine. Investors have donated more than $22 million worth of crypto to the Ukrainian government during the conflict, according to blockchain analytics firm Elliptic.
Cryptocurrency can be used “to donate to causes all around the world with much less friction than the existing banking system,” George Harrap, co-founder of Solana crypto wallet Step Finance, told CBS MoneyWatch.
David Szakonyi, a political science professor at George Washington University, thinks Russian leaders could turn to crypto to help the country prop up its financial sector, while noting that digital currencies are unlikely to “serve as a substitute for corporate transactions over time.”
U.S. law enforcement and Treasury officials are stepping up their efforts to combat the misuse of crypto to evade sanctions, according to the Associated Press. But some crypto exchanges have said they do not plan to shut out Russia-based accounts, resisting pressure to join the West’s effort to cut off the country from global payment networks.
“We are not going to unilaterally freeze millions of innocent users’ accounts,” Binance, the world’s largest crypto exchange, said in a statement last week. “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.”
Kraken, another exchange platform, also won’t shut down its Russian accounts unless the company is legally forced to do so, CEO Jesse Powell said via Twitter.
“Our mission at Kraken is to bridge individual humans out of the legacy financial system and bring them into the world of crypto, where arbitrary lines on maps no longer matter, where they don’t have to worry about being caught in broad, indiscriminate wealth confiscation,” Powell tweeted.
The Associated Press contributed to this report.
Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range from economic inequality and housing issues to bankruptcies and the business of sports.