Bitcoin jumps 13% as Russia-Ukraine conflict continues and U.S. imposes further sanctions

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A visual representation of bitcoin.

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Bitcoin jumped 13% on Tuesday continuing its sharp rebound as the Russian assault on Ukraine continues and the U.S. ratchets up sanctions.

The cryptocurrency was up more than 13% at $43,650.80 as of 7:04 a.m. ET after hitting a high in the past 24 hours of $44,165.90, according to CoinDesk data. That rally comes after cryptocurrency prices plunged last week as risk assets such as stocks sold off following Russia’s invasion of Ukraine.

Ether was up more than 10% at $2,907.88

Market analysts said there could be a number of reasons behind the big surge in bitcoin including investors buying the dip, attempts to evade sanctions and Ukrainians and Russians trying to get their money out of their respective countries.

Crypto to evade sanctions?

But cryptocurrency could also be a way for regular Russians and even Ukrainian citizens to get their money out of their respective countries as their currencies remain volatile.

Bitcoin traded at a 6% premium on Binance exchange’s Ukrainian hryvnia market, according a note published by cryptocurrency research firm Kaiko on Monday. Kaiko also noted that it is “seeing a surge in both Russian ruble and Ukrainian hryvnia cryptocurrency transactions” on cryptocurrency exchanges.

“Until there were no heavy financial sanctions on Russia, bitcoin was moving in tandem with the U.S. stock indexes, but these reports, which confirmed real use case for cryptocurrencies in times of crisis, are pushing the price higher,” Yuya Hasegawa, crypto market analyst at Japanese exchange Bitbank, told CNBC on Tuesday.

On Sunday, Mykhailo Fedorov, vice prime minister of Ukraine, asked major cryptocurrency exchanges to block the addresses of Russian users.

Binance, the world’s largest exchange, said it would freeze accounts for any Russians on the sanctions list, but would not “unilaterally” block accounts of all Russian users.

Other cryptocurrency exchanges took a similar stance.

Bitcoin ‘watershed’ moment?

“Bitcoin and cryptocurrencies are arguably having their watershed moment against backdrop of global uncertainty and tension related to the Russia-Ukraine crisis,” Ayyar told CNBC.

“Crypto is decoupling from traditional markets and can be clearly seen in the performance.”

People have been donating cryptocurrency to the Ukrainian army too, “proving that crypto is fundamentally a technology that cannot be ignored,” Ayyar added.

He also said that a bottom for bitcoin was already forming as the war was getting underway.

Michael Rinko, venture associate at AscendEx, told CNBC on Monday that $38,000 was a key level for bitcoin.

“More people bought at $38,000 than at any other level above or below for a good margin,” he said.

However, Bitbank’s Hasegawa warned of further volatility ahead.

“There still are a lot … of potential risks up ahead for the market, like the Russia—Ukraine negotiation falling apart, even more huge air strikes on Ukrainian cities, nuclear threats, and U.S. jobs report on Friday, so it looks like the next couple of days are going to be a wild ride for bitcoin,” Hasegawa said.

— CNBC’s Tanaya Macheel contributed to this report.

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