On Monday, Russia’s currency fell 26% to a new low versus Bitcoin, extending losses after the US announced that penalties on Moscow’s oil exports were being considered.
In the last month, the ruble has lost approximately 60% of its value against Bitcoin, making one Bitcoin worth over 5 million rubles.
Russia’s economy pressured due to sanctions.
The newest sanctions imposed by the West in response to Russia’s invasion of Ukraine will be oil restrictions. The US and its allies had in February stopped many Russian banks from using the SWIFT payments network, as well as freezing their abroad assets, thereby depriving Russia of its foreign exchange reserves.
The decision to restrict oil will only exacerbate this trend, putting additional strain on Russia’s economy. Oil accounts for more than half of Russia’s overall exports, according to the Observatory of Economic Complexity’s data. The ruble, which was already at historic lows against the dollar, as on Monday, dropped further.
To defend the economy, the Russian Central Bank acted promptly, raising interest rates to 20%. The economic situation, however, remained terrible, according to the statement. Several international companies have halted operations in Russia as a result of recent sanctions.
Demand for cryptocurrency boomed in Russia
According to data from data provider , cryptocurrency trade volumes in Russia increased significantly in the last two weeks of February, particularly following US sanctions. This sparked rumors that Russians were turning to crypto to secure their riches, particularly given the surging popularity of stablecoin tether.
Despite Visa and Mastercard’s bans, the majority of big crypto exchanges remain operational in Russia. Due to currency instability and limited access to global markets, Coinbase CEO Brian Armstrong recently stated that many Russians are embracing bitcoin as a lifeline. Armstrong also stated that there was minimal chance that Russia would use crypto to circumvent sanctions, which was a significant fear among Western lawmakers.
As the hryvnia plummeted, a number of Ukrainians were observed resorting to cryptocurrency, with tether being particularly popular.