Russia-Ukraine Conflict: Effects on Cryptos, Bonds, and Gold

The ongoing war between Russia and Ukraine unveils ripple impacts on the global economy. The NBU (National Bank of Ukraine) introduces some limitations on cash transactions, considering martial law declaration. Russia sees similar developments as Ruble declined by 30%. That comes as the nation hiked interest rates to 20% from 9.5%.

Russia raised to counter surging inflation and rescue ruble plummets. Anshul Gupta, Co-founder of a bond purchasing network Wint Wealth, said the move would increase borrowing rates, making it difficult for households and businesses.

As equities went volatile, here’s how some assets perform amid the ongoing geopolitical crisis.

Gold

Gold has been a store of wealth since the invention of money. Individuals resort to the asset to safeguard their wealth during economic uncertainty and recession. Meanwhile, the 24-carat gold rates climbed from 21 February 2022 to today.

Gold seems to fluctuate opposite to the dollar and the global currencies that devalue because of inflationary fiscal policies and government debts.

Moreover, Gold is a standalone product due to its uncorrelated relationship, increasing purchasing power. Governments can’t tamper with gold supply because it can expand their money supply and liabilities. That drives gold demand higher, translating to surged prices.

Bonds

Bond price and interest rates are inversely proportional. That way, the increasing tension had investors selling Russian dollar-controlled bonds. That had the yield doubling to 8.3% (Bloomberg data). Such developments had the United States Treasury bond yield plunging amid massive demand by investors looking for safer assets.

Bond yields reflect borrowing costs for banks, corporates, and governments. Anshul Gupta said that capital became expensive, and businesses might turn unviable.

Cryptocurrencies

Digital coins like Ethereum and Bitcoin see increased demand. That translated to price gains. BTC traded 1.86% high today at $44,112.93, while ETH gained 2.67% to $2,984. Besides cryptos, blockchain-based stablecoins such as USDT sees high demand. Stablecoins are cryptocurrencies that tied value 1:1 to alleviate volatility.

Leading crypto exchange in Ukraine Kuna shows USDT trading at a 10% high premium. That is due to surged demand for purchasing the token but few USDT sellers. Indeed, the ongoing Russia-Ukraine war translated to increased crypto demand.

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