Russians Buying BTC at $20k Premium, BTC Passes Ruble
Russia citizens are fleeing to Bitcoin as a cash safehaven, buying BTC at $20k above market value, while BTC has passed the Ruble.
For the first time, we’re seeing what large scale international sanctions do to cryptocurrencies. People have long speculated that Bitcoin, and the broader crypto market, will be a safe haven for distressed currencies – and thus far, they’ve been correct. Many developing countries have been adopting cryptocurrencies for a number of reasons. In Venezuela’s case, they’re fleeing a rapidly inflating currency in their local Bolivar, for example.
The Advocate View
With the international community's wide-ranging sanctions against Russia, this is the first opportunity in the post-crypto era to observe the ramifications of segregating a major global economy from the economic world at large. In theory, if Russia has access to the global internet, they can’t be cut off from crypto assets like Bitcoin.
A Bitcoin advocate would say that this is what Bitcoin was made for. When a currency is no longer reliable or freely available, Bitcoin will act as a more stable currency that is not sanction-able, given it’s decentralized nature.
Are They Right?
Well, we’ve now run the test and the numbers are in. Due to heavy sanctions, the Russian Ruble is down 30% over the past week. Due to the drop in the Ruble, and recent recovery of Bitcoin, BTC has just passed the Ruble in terms of market capitalization.
Things look similarly unpleasant from the perspective of an individual Russian citizen. The economic panic forced the Russian government to intervene to stop a run on banks. There are images featuring lines the length of multiple city blocks, composed of people attempting to withdraw money from ATMs.
Now, according to DeFi prime, there are reports of citizens buying BTC from other locals and some fiat on ramps at $20k above the worldwide rate. Playing off the well known “Kimchi Premium” – wherein South Koreans would pay more for cryptocurrencies than the rest of the world due to the regulatory difficulty of buying – , DeFi Prime coined this the “Matreshka Premium.” Matreshka are better known in the West as Russian nesting dolls.
It’s been less than a month since Russia shifted their stance on cryptocurrency, moving to legalize and tax the asset class.