- Bitcoin, which showed some signs of retaking US$40,000 last week has since fallen to US$37,700 at the time of writing while Ether is barely clinging on to US$2,600.
- Nevertheless, that cryptocurrencies continue to be used as a means to support the Ukrainian people has been put into the spotlight as a relatively speedy means by which anyone in the world can send aid.
While weekends are a tricky time for cryptocurrencies under normal circumstances, especially given the diminished volumes traded, Western sanctions are now putting risk assets into sharp focus, and benchmark digital assets slipped into the last day of February.
Bitcoin, which showed some signs of retaking US$40,000 last week has since fallen to US$37,700 at the time of writing while Ether is barely clinging on to US$2,600.
Nevertheless, Bitcoin remains well above key technical levels that would push it into oversold territory, managing to stay well above US$33,000 and there are signs that any rally, regardless of how short-lived, could indicate seller exhaustion.
Helping cryptocurrency prices though is the stream of donations made in the cryptocurrency, pouring in after the Russian invasion.
Technical indicators look promising as well and a constructive rally could push Bitcoin to the US$50,000 to US$55,000 level, according to a note by Rick Bensignor, President of Bensignor Investment Strategies and a former strategist for Morgan Stanley (+2.98%).
Cryptocurrencies in general, and Bitcoin in particular, have demonstrated resilience thanks to their use as a means to receive donations in Ukraine, to support the struggle against the Russian invasion.
Over the weekend, cryptocurrency exchange Binance announced that it would be donating US$10 million for aid to Ukrainians, including medical and humanitarian relief supplies.
And as shells rain down on Ukraine’s cities, the Bitcoin hash rate – the amount of computing power being used to mine the cryptocurrency and process transactions on the network – has taken a hit as many mining facilities face disruption from the ongoing conflict.
According to data from Blockchain.com, Bitcoin’s hash rate tumbled from a record 248.1 million terahashes as recently as February 12, to just 173.8 million on Saturday.
Both Russia and Ukraine are home to Bitcoin and other cryptocurrency miners, given access to cheap sources of energy, but which have since been impacted by the invasion.
Because some mining infrastructure are in active warzones in Ukraine, they have had to be shut off and even those which are in “safer” areas of Ukraine are preparing to relocate, should they too be embroiled in the conflict.
Soaring energy prices are also putting pressure on cryptocurrency miners, with higher energy costs eating into their profit margins.
Nevertheless, that cryptocurrencies continue to be used as a means to support the Ukrainian people has been put into the spotlight as a relatively speedy means by which anyone in the world can send aid.
Whereas a typical fiat currency transfer could take days or weeks to process, especially given that Ukraine’s infrastructure is under siege, the ability to send Bitcoin across war-torn borders stands in sharp relief to traditional money transfers and may seek to remind investors of the value proposition of cryptocurrencies.