If Russia Invades Ukraine, Will Bitcoin Play a Bigger Role Amid US Sanctions?

The Russian invasion of Ukraine is followed by millions, if not billions of people. Of course, the FUD soared even higher as Ukrainian reports claimed the Russian military had… seized control of the Chernobyl nuclear power plant.

As the US and EU hit back with economic sanctions, financial experts are skeptical about their ability to influence the Russian government, which has been reducing its reliance on US-based assets for several years.

However, more fintech analysts think Bitcoin could play a role in future sanctions.

Time to hit the accelerator?

Investment analyst and commentator Anthony Pompliano stressed out on Russia’s vast foreign exchange and gold reserves, while discussing the European country’s declining dependence on the dollar. In his newsletter he writes noted

“This brings me to the main point: the United States needs to start thinking about what to do in a world where much of the world doesn’t use the US dollar as their reserve currency.”

To that end, he suggested that the US could adapt by becoming the top user of Bitcoin. The Investment Manager said

“The next best option for being the global reserve currency producer and distributor is to be the most advanced user and holder of a global reserve currency that no country controls.”

At the same time, Pompliano reiterated that the US should not give up the dollar. He previously believed that America could use Bitcoin as a hedge, in case the dollar ceased to be the global reserve currency in the future. Pompliano added

“The United States should put bitcoin in its central bank reserves. We must immediately incentivize as many bitcoin miners worldwide as possible to move to the US. We need to abolish the capital gains tax on bitcoin spending and treat it like a traditional currency.

Trimming too many hedges

However, this may be easier said than done. Experts look with concern at Bitcoin’s rising correlation with S&P500, Nasdaq and technology stocks. If this link becomes stronger in the future, Bitcoin’s ability to hedge against risk will be diluted.

Pompliano also insisted that the US government should educate Americans about decentralized digital currencies, which he expected would take years to complete.

What is the damage?

At the time of writing, Bitcoin change hands at $38,482.92, up 10.57% in the past 24 hours. Many of the top 20 cryptocurrencies also saw significant rallies in the last day.

In addition, the market went from a state of extreme fear to ‘normal’ fear.

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