The surge in cryptocurrency purchases follows Russian President Vladimir Putin’s forbiddance on all Russian residents from transferring forex overseas.
Earlier, Russian President Vladimir Putin banned all Russian residents from transferring forex overseas, including payments to fulfill foreign loan contracts, in retaliation for sanctions imposed by the U.S. and Europe, which could leave a significant portion of the country's $478 billion foreign debt facing default risk.
The measures, which will take effect from March 1, also include restrictions on companies buying back shares, according to the text of the decree published on Monday. It is unclear whether the new rules apply to sovereign debt and whether it constitutes a default.
Bitcoin has continued to rise since Monday night. In the early morning of Tuesday, Bitcoin rose by $2,000 in a short term, breaking through the $44,000 mark at the highest level, rising by more than 17% at one point.
Russian 5-year credit default swaps (CDS) surged to a record 1,200 bps the following night, up from 573 bps earlier. Cryptocurrency purchases surged after Putin’s announcement. Cryptocurrencies are seen as a potential way to move foreign exchange out of the country.
Bitcoin transactions in rubles have surged to their highest level since May last year, according to crypto data firm Kaiko.
It is unclear whether the increased transaction volume indicates more "buying" interest between the two countries. However, Clara Medalie, head of Kaiko Research, said the discrepancy over the past five days with other fiat currency pairs including the U.S. dollar and the euro means Bitcoin may be more attractive in both markets.
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