As Russia invades Ukraine, will Bitcoin play a larger role amid U.S. sanctions
Russia’s invasion of Ukraine is being watched by millions, if not billions of people. Naturally, FUD rose by another notch as Ukrainian reports claimed that the Russian army had seized control of the Chernobyl nuclear plant.
While the USA and EU have hit back with economic sanctions, financial experts are skeptical of their ability to affect the Russian administration, which has been reducing its reliance on US-based assets for some years now.
However, more fintech analysts think that Bitcoin might have a role to play in future sanctions.
Time to hit the accelerator?
Investment analyst and commentator Anthony Pompliano stressed on Russia’s vast foreign currency and gold reserves as he discussed the European country’s falling reliance on the dollar. In his newsletter, he noted,
“This brings me to the most important point — the United States has to start considering what to do in a world where a large portion of the world doesn’t use the US dollar as their reserve currency.”
To that end, he proposed that the USA could adapt by becoming the top user of Bitcoin. The investment exec said,
“The next best option to being the producer and distributor of the global reserve currency is to be the most advanced user and holder of a global reserve currency that no single country controls.”
At the same time, Pompliano reiterated that the USA should not give up on the dollar. Rather, he felt that America could use Bitcoin as a hedge, in case the dollar was no longer the global reserve currency in the future. Pompliano added,
“The United States should put bitcoin in the central bank reserves. We should immediately incentivize as many bitcoin miners globally to move to the US. We should remove the capital gains tax on bitcoin spending and treat it like a traditional currency.”
Too much hedge-trimming
This may be easier said than done, however. Experts are worriedly eyeing Bitcoin’s rising correlation with the S&P500, Nasdaq, and tech stocks. If this link grows stronger in the future, Bitcoin’s ability to hedge against risk is diluted.
Pompliano also insisted that the U.S. government should educate Americans about decentralized digital currencies, which he expected would take years to complete.
What’s the damage?
At press time, Bitcoin was changing hands at $38,482.92, having risen by 10.57% in the past 24 hours. Many of the top 20 cryptocurrencies also saw significant rallies on the last day.
What’s more, the market went from a state of extreme fear to “normal” fear.