The Russian invasion of Ukraine could cause more people to turn away from the dollar in a possible boost for cryptocurrencies, according to billionaire Mike Novogratz, a longtime token enthusiast.
The recent surge in bitcoin trading using the Russian ruble and Ukrainian hryvnia has bolstered advocates’ argument that a decentralized currency is capable of offering refuge when access to traditional banking is restricted.
The invasion and sanctions against Russia could push more ordinary people into crypto, Novogratz said while making it clear that this does not imply that Bitcoin is being used to avoid sanctions.
“In essence, we have never had a group of nations seize real estate from Russian tycoons.”, the founder of Galaxy Digital Holdings said in an interview. “This sends a message: I want to have money that lives outside of traditional power. That’s why bitcoin was created, because people don’t trust governments”. By contrast, the ledgers of the blockchain are transparent.
In the past two days, the world’s largest cryptocurrency has decoupled from risky assets, helping narratives that the coin could be seen as a store of value, uncorrelated to the broader market. While still elevated at 0.55, Bitcoin’s correlation with the S&P 500 has receded from a high of 0.7 earlier this year, data compiled by Bloomberg shows.
Some analysts have attributed the sanctions against Russian banks, companies and wealthy elites, and the subsequent economic fallout, as a driver of digital assets. For bystanders like China, there are lessons to be learned from trusting the US dollar, Novogratz said.
“I’ll tell you one thing, they will sell their reserves before they invade Taiwan.“, said. “This is a big problem, in many ways. This is starting the acceleration of the de-dollarization of the world”.
