Russia-Ukraine Crisis Is Demonstrating 'The Power Of Cryptos': Ark Invest Analyst

The Ukrainian crisis has roiled the market to no end, resulting in considerable volatility. Cryptocurrencies weren't spared either, but these digital currencies have asserted their utility during this tumultuous time.

Ukraine & Russia Take To Cryptos: The Russo-Ukrainian crisis has "demonstrated the power of cryptoassets" as a source of "economic independence," Ark Invest analyst Frank Downing said. In response to Ukraine's plea for crypto donations, the country has raised more than $54 million in Bitcoin BTC/USD, Ethereum ETH/USD and other cryptos, the analyst noted.

On the other hand, Russians took to Bitcoin as a hedge against a falling ruble, Downing said. This is reflected in the 243% spike in BTC-RUB trading volume in February, he added. To put things in perspective, the analyst noted that Bitcoin's market cap is currently more than the Russian money supply.

Russia Can't Take Cover Under Cryptos: Liquidity in crypto is still a fraction of the global currency market and therefore Russia cannot use digital currencies to get around potential sanctions, Downing said.

"Average income earners in Russia might be trying to preserve their purchasing power and asset base, but oligarchs would need much more than the roughly $1 trillion crypto market capitalization to do the same," the analyst said.

Additionally, blockchain's transparency will help uncover any "whale" transactions, the analyst said.

Related Link: Who Spends Ukraine's Bitcoin Donations — And What Are They Being Used For?

Why Decentralization Will Win: The Ark Invest analyst noted that blockchain infrastructure provider Infura and NFT marketplace OpenSea had to ban IP addresses originating from Russian-controlled regions of Ukraine and in the process had to delist individual accounts.
Average users, therefore, could not make any moves in crypto, he added.

Crypto networks favor central service providers due to the ease of use and a single point of failure, the analyst said. Centralized service providers, according to the Downing, cannot cope with extraordinary disruptions.

Companies such as Block, Inc. SQ that are focused on developing privacy and decentralization for the custody and exchange of bitcoin are likely to gain share, the analyst noted.

Photo: Courtesy of Jernej Furman on Flickr