FX.co ★ War increased demand for cryptocurrency

The aggravation of the Russian-Ukrainian crisis, new sanctions, and rising oil prices are forcing investors to flee from risky assets. The crypto space is regaining its safe-haven appeal as more people use digital assets like Bitcoin to transfer funds during times of conflict.

The offensive against Ukraine intensified on Tuesday, with Russian officials ordering Ukrainians in Kyiv to leave their homes and go down to air raid shelters, warning of more strikes against Ukrainian security forces and communications facilities in the capital.

Meanwhile, rocket attacks intensified in the second largest city of Ukraine, Kharkiv. In addition, U.S. officials reported a Russian armored convoy several miles long heading for Kyiv.

The crypto space mirrored the stock market performance last week as it reacted negatively to any additional geopolitical uncertainty, with Bitcoin and Ethereum facing significant selloffs. However, the situation began to change when the West increased sanctions against Russia over the weekend.

Bitcoin jumped another 5.5% on Tuesday, trading at $45,000.

Ethereum also surged, climbing over 5%, trading at $3,000.

The latest round of sanctions imposed on Russia this week, aimed at isolating its economy, sent the country's assets into free fall.

Economic uncertainty has also sparked a massive bank run in Russia, with people lining up at ATMs in Moscow and Russian banks across Europe to withdraw cash.

Last week, the Central Bank of Ukraine also said it was suspending digital money transfers and setting a limit on cash withdrawals.

Amid these restrictions, more people are turning to bitcoin and other cryptocurrencies to transfer funds, according to GlobalBlock analyst Marcus Sotiriou.

Cryptocurrency has played an important role in this geopolitical conflict. Ukrainian officials sent requests for donations to Twitter, which included addresses of online wallets for bitcoin, Ethereum, and Tether. Since then, Ukraine has received more than $30 million worth of cryptocurrency donations, according to blockchain tracking company Elliptic.

Crypto data company Kaiko has reported that transactions on centralized bitcoin exchanges conducted in Russian rubles and Ukrainian hryvnias have jumped to multi-month highs since the war in Ukraine began.

In the future, cryptocurrency drivers will remain: the war in Ukraine, but updates to the Federal Reserve's monetary policy in the U.S. could be a headwind for Bitcoin.