Arcane Research says the surge in trading volumes is driven by fears that the country's banking system could collapse — and demand in Russia is also at all-time highs.
Ukrainians are "buying crypto like never before" as consumers seek a safe haven for their savings, according to a new report.
Arcane Research says the surge in trading volumes is driven by fears that the country's banking system could collapse.
On Tuesday, the UN estimated that 677,000 refugees have now fled Ukraine — and converting cash into digital assets means those escaping the country can "bring some of their wealth with them."
The report's authors also noted that trading volumes in Russia have also spiked. Pairs that link Tether and Bitcoin with the ruble have reached all-time highs in recent days.
Earlier this week, the ruble dropped to a record low against the U.S. dollar as the full effect of economic sanctions began to be felt. Russia's central bank hiked its main interest rate to 20% after warning that the economic climate has "drastically changed," and a number of major corporations are now severing business ties with Moscow.
"Without Bitcoin, I probably would not be here talking to you right now."
'A Fearful February'
Data from Coinglass shows that Bitcoin accelerated by 12.2% in February — marking the cryptocurrency's first month of gains since last October.
Much of this growth can be attributed to Monday — the final day of February — when BTC rallied by 14.5% and diverged from stocks.
Arcane Research notes that this daily price increase was the biggest since Feb. 8, 2021, when Elon Musk declared that Tesla had made a $1.5 billion investment into the digital asset. The report's authors added:
"New crypto narratives are spinning up as the war in Ukraine escalates … Investors are speculating that crypto will become increasingly important as apolitical and trustless money in a time of escalating geopolitical uncertainty, conflict, and capital controls."
Whereas BTC had initially followed tech stocks in plunging when the war in Ukraine began — with gold rising — the report highlights how this trend has reversed in recent days:
"Gold has historically fared well in times of increasing conflict but has not experienced nearly the same gains as Bitcoin over the past few days, being significantly negatively correlated to Bitcoin."
For now, BTC's rally has stopped short of breaking through the $45,000 barrier. But despite many analysts warning that resistance at $40,000 would be tough to crack, the world's biggest digital cryptocurrency ended up surpassing this price point with relative ease. Arcane added:
"As was the case during the early February rally, Bitcoin has found resistance at $44,000. This is an important resistance level, and Bitcoin has yet to convincingly break the $44,000 resistance since its early January sell-off. If the third time is the charm, and Bitcoin manages to breach through the $44,000 resistance, $47,000 is the next resistance area to pay attention to."
On the downside, Arcane Research says $40,000 may now act as support — with further support found between $36,000 and $38,000.
While Bitcoin's surge in value has also nudged altcoins into positive territory, it's interesting to note that BTC's dominance has risen — hitting 43% compared with 41% a month ago.