Ukraine and Russia recorded an increase in crypto because of the current war going on
According to a survey by Chainalysis, both Russia and Ukraine have seen a spike in the number of cryptocurrency transactions as a direct result of the ongoing conflict. Because Ukraine has successfully raised a significant amount of money through the use of cryptocurrency, this should not come as a surprise. Concurrently, Russia has been subjected to sanctions by the United States and the European Union, which has resulted in the country’s adoption of cryptocurrencies. As a result, it has evolved into a reliable strategy for Russia to sidestep the sanctions.
The conflict between Russia and Ukraine has been a driving force behind the increased use of cryptocurrencies. Chainalysis’s report titled “2022 Geography of Cryptocurrency” goes into great depth regarding the economic impact that the ongoing conflict between Russia and Ukraine is having as well as the high inflation rates. According to the survey, an increase in cryptocurrency transactions was seen in both Russia and Ukraine shortly after the conflict broke out. Despite this, when more sanctions were imposed on Russia over the course of time, the volume of their transactions remained relatively constant. On the other hand, Ukraine has seen consistent expansion up until June.
The number of transactions reached its highest point in the month of March. There was an increase of 121%, or $307 million, for Ukraine, while there was an increase of 35%, or $805 million, for Russia. However, after reaching that peak, the volumes continued to fall until they reached their lowest point in August. The monetary controls that Ukraine has in place could be one explanation for the first price increase. It entails putting restrictions on transactions involving dollars and euros. Therefore, a large number of users had the option of exchanging their currencies for cryptocurrency. And once these limits were loosened up, there was a significant drop in the overall volume of trades.
Turning our attention to Russia, once the conflict had begun, the most pressing concern was figuring out how to take money out of the nation. For this purpose, bitcoins are the instrument that is most suitable to use. People also started looking for ways in which they might convert their cryptocurrency holdings into fiat currency. However, the cryptocurrency markets are not yet developed enough for Russia to be able to entirely sidestep the sanctions using them. But at the very least, it will make it easier for them to continue conducting international business without relying on the SWIFT network.
The Chainalysis analysis makes it abundantly clear that the most favorable conditions for cryptocurrency adoption are those in which things are unstable. This war is an excellent illustration of that point. Even if we take a closer look at the nations that have been the most proactive in their adoption of cryptocurrency, we find that they are third-world countries with weak economies, high inflation, and declining values for their national currency. The reason for this is that cryptocurrencies offer solutions to these issues.