(Bloomberg) — Bitcoin was little changed after rallying more than 16% over the past two days as the possibility of expanding sanctions was raised to prevent Russians from using cryptocurrencies to circumvent restrictions.
The largest digital asset fluctuated between gains and losses and traded at around $43,870 as of 1:02 p.m. in New York. Ether was also little changed, while many altcoins also swung between gains and losses.
After plunging at the onset of the Russian attack on Ukraine, cryptocurrencies had reasserted themselves as a refuge in recent days. That also increased the focus on them as a potential vehicle for getting around sanctions. Members of the European Union and the Group of Seven are working to block Russians from using digital assets to evade monetary sanctions, German Finance Minister Christian Lindner said during a televised interview Wednesday.
David Mercer, chief executive officer of London-based LMAX Group, said the crypto market simply is not big enough for all the attention it has received from regulators who question crypto’s role in helping Russians evade sanctions. “I don’t know why Bitcoin or crypto is being singled out,” Mercer said.
Despite calls from politicians, Binance– the biggest crypto exchange in the world– won’t ban Russian users from using its platform, although it will freeze the accounts of those included on international sanction lists, Changpeng Zhao, founder and chief executive officer of Binance, told Bloomberg earlier.
Noelle Acheson, head of markets insights at Genesis Global Trading Inc., said the kind of large cryptocurrency transactions sanction evaders would be expected to use are relatively easy to track, noting that on-ramps or off-ramps can be held accountable.
The outperformance by cryptocurrencies compared with stocks and broader market measures had some analysts pointing to a break from the narrative that crypto is just a risk-on asset.
“Certainly, there’s been some buying interest in Bitcoin, but I don’t think it’s significant enough to be moving from S&P to Bitcoin just because of this invasion,”said Mercer. “Bitcoin is still a very small market, so it doesn’t take a lot of buying to support the price.”
Bitcoin volume growth is often correlated with political instability, according to James Butterfill, head of research at CoinShares. Trading volume in Bitcoin using the ruble have surged to the highest level since May, suggesting Russians are potentially moving their money into crypto as the Russian currency plunges to a record low.
“Bitcoin will perform well in times of extreme duress,” said Teong Hng, chief executive of Hong Kong-based digital asset trading firm Satori Research. “Bitcoin should continue to trade well and find buyers on dips as it’s ‘anti-fragile’ nature has assert itself.”
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