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After a relatively good period for cryptocurrency, something unspeakable happened in the world that changed that. Russia initiated an invasion against their neighbors Ukraine which is causing a lot of turmoil for the whole world. Every marketplace is at danger, including the crypto one. At the beginning of March of 2022 Bitcoin fell to it’s lowest price over the last month. As soon as the war began, people started selling their crypto assets and the price of a lot of crypto currencies started to go down. There was a point when Bitcoin reached a low that hasn’t happened in years as it fell below $35,000. Percentage wise, the coin lost about 7.9% of its value. Ethereum, on the other hand, lost about 10.8% of its value.

Cryptocurrency News
Cryptocurrency News

After the war began, the US and the rest of Europe imposed sanctions on Russia which created a lot of problems on the markets. Global stocks and US bond yields dived, while the dollar, gold and oil prices rocketed higher as investors scrambled for perceived safe-haven assets. European stocks alone plunged 2.6 per cent. As it has been seen in recent history, whenever stocks fall, the crypto market follows them. However, in recent days, Bitcoin has been really volatile but it’s mostly been going up. It seems the sanctions and blockage of trade has caused people to turn to alternative means, like crypto coins. Below, we will explain exactly what’s going on and why the price of all crypto coins has been so volatile.

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Bitcoin Turnaround

After the initial shock and massive drop in crypto prices, things seem to be changing over the last few days. As the Russian ruble is crumbling because of all the sanctions, it seems the Russian government has turned towards crypto. An alternative source of income will definitely help Moscow fight the blockade imposed by the Western countries.

However, that’s not all as the crypto market is helping Ukraine as well. They have called for help in the form of donations. They require help in their war effort and some of those donations have been coming in the form of crypto coins. According to information from Elliptic, a company which analyses the blockchain, more than $35 million has been collected through crypto currency.

As a matter of fact, the market capitalization of Bitcoin worldwide now exceeds that of the ruble. Basically, all the Bitcoin that’s traded at the moment in the whole world is worth more than all the Russian rubles that are in circulation. The Russian currency is currently ranked 17th in market value, behind the Thai baht and the Mexican peso. Even Dogecoin which was created as a joke is currently worth more than the ruble. Last week, Ukraine’s vice prime minister Mykhailo Fedorov announced his country was now also accepting donations in Dogecoin.

EU’s Response

As we mentioned above, because of the sanctions and the crypto trading that’s helping Ukraine, crypto prices have been all over the place during the last week. At the moment a lot of Russians are converting their money in crypto because the ruble will continue to drop as long as the war lasts. For that reason, Ukraine has made requests for EU countries to block Russian users on crypto exchanges. On top of that, they are asking for their assets to be frozen, inflicting even more economic damage to them. So far, nothing has happened on that topic because it makes no sense to punish Russian people for the acts of their government. So, for the time being, crypto trading will grow with every passing day.

Cryptocurrencies are by design a way to circumvent traditional financial institutions, and their growing success has been making Western governments nervous. Russia is already the world’s third-largest Bitcoin miner. And Iran has used Bitcoin mining in the past to bypass trade embargoes. European Union officials admit that crypto mining and trading could be used to undermine sanctions on Russia, and say they are looking into it.

“We are aware there are routes for circumvention and various attempts to circumvent the sanctions. We are looking into this,”

an EU official told reporters in Brussels on Wednesday.

The Future of Crypto

There are a lot of young investors that are sticking to Bitcoin as a long-term investment. Instead of making a quick buck every time crypto prices go up, they hold their assets for the future. Keeping these assets has become so popular that there is a name for it. It’s called HODLING and it became a thing a while back when a trader misspelled the world “hold” on an online forum. We are mentioning this because holding on to crypto assets might stabilize the current volatility. Thanks to these investors, Bitcoin is still trading around the $40,000 mark regardless of what’s happening in the world. If these traders were to sell their assets, the whole crypto market could drop drastically.

If we look at this trend we will see that it did stabilize the crypto market. Some researchers suggest that the value of Bitcoin actually went up by 5% in recent days. It’s value is actually higher than what it was before the war between Russia and Ukraine started. A study by multi-asset retail investment platform eToro, which says it has millions of users, found that those aged 18 to 34 were far more likely to invest in crypto than anyone else, with 66% of that age bracket owning bitcoin and other digital currencies. That’s up from 46% last July.

As Russian troops started their invasion on Feb. 24, the crypto market went crazy for a couple of days. Looking at Bitcoin, it dropped by 14% over night. However, it has went up by 15% since then. Bitcoin has taught us to expect the unexpected which means caution needs to be taken. Make sure you track Musk’s tweets as they turn the crypto market into a frenzy.