Buying Russia-denominated cryptocurrencies fell despite the broader market looking bright as most cryptocurrencies recovered from their lower support levels.
According to blockchain analytics firms, crypto transactions in Russian rubles have been decelerating on significant exchanges. The same debunks theories that the country could pivot on digital assets to avoid sanctions.
Cryptocurrencies are not the way out for Russia
Over the past week, Bitcoin has gained more than 20% as analysts and market experts attributed the sudden surge to Russians buying cryptocurrencies amid mounting economic sanctions. However, the story that the Russians are evading economic sanctions through cryptocurrencies seems slightly misleading.
Data from Chainalysis showed that the trading volume of rubles-denominated cryptocurrencies was only $ 34,1 million on March 3. As of February 24, trading volumes were approximately $ 70 million. The same means that trading in rubles-denominated cryptocurrencies has plummeted by nearly 50% in a week, even on very popular platforms in the country such as Bitcoin Pro.
As per the news, Citigroup Inc also estimates that the actual Bitcoin purchase from Russia was only 210 BTC on average per day over the past week. In particular, the total daily volume generally varies between $ 20 and $ 40 billion.
That said, while the Russians may still be trading on a peer-to-peer basis, large volumes should still be visible on the blockchain. This trend above suggests that Bitcoin's rally over the past week above $ 45.000 had very little to do with the nation's purchasing power in practice.
Hence, it appears that the recent rise in the price of Bitcoin was mainly because traders were expecting an increase in the purchasing power of Russia's BTC, not because purchasing power has seen a surge.
Increased regulatory oversight
The United States has imposed several sets of sanctions in response to Moscow's unprovoked attack on Ukraine, including sanctions against Russian banks, its central bank, its sovereign debt and foreign minister Sergey Lavrov.
This weekend, the US, its European allies and Canada decided to cut some Russian banks out of the SWIFT interbank messaging system. SWIFT connects over 11.000 banks and financial institutions in nearly 200 countries and territories.
In addition, recently, the state of New York increased its blockchain surveillance capabilities to prevent cryptocurrencies from supporting Russian interests. What do you think of it? Let us know in the comments section below.