It’s been a great week for cryptocurrencies with Bitcoin rallying past $47,000 for the first time this year and other cryptos like Ethereum also enjoyed a strong bounce back. So has the ‘crypto winter’ finally passed or is this just a brief respite?
Much of 2022 has been relatively dismal on the cryptocurrency markets. Compared to the record highs of $65,000 that Bitcoin enjoyed last winter, the original cryptocurrency has suffered from a mediocre demand as investors flocked to less risky assets. This was largely due to concerns about how the Federal Reserve was planning to introduce a series of interest rate rises in an attempt to counter an overheating economy.
However, March has seen a gradual comeback from cryptocurrencies. Bitcoin, Ether, Shiba Inu, Dogecoin and Solana have all enjoyed a growing number of trades, and expectations are that cryptos will continue to make gains in the coming weeks. In particular, Cardano has performed especially well with a 32% rise in value in just five days.
While the S&P 500 has been hit by a decline of 4.7% since the year began, Bitcoin is actually up 1.4% since the start of 2022. This has meant that the crypto has managed to erase all losses sustained this year and hopes are high that Bitcoin could go on to break through the $50,000 barrier soon. Such a growth would still be some way short of what Bitcoin was experiencing less than six months ago, but it leaves room for some optimism.
Russia powering the Bitcoin revival
While Bitcoin is having a strong return to form, much of the crypto’s good fortune has come from an unlikely source. This is because a Russian lawmaker said that the nation would accept crypto payments for its oil and gas exports. Russia has been forced to do this as a result of sanctions imposed by the US and EU that have drastically cut the value of the rouble.
With the value of Bitcoin rising by as much as 30% within the past year, Russia will be hoping that crypto assets will help the economy that is starting to see the devastating impact of the sanctions. This follows on from the concerns that many Russian oligarchs are using cryptocurrencies as a way of avoiding sanctions. As a result, the Ukraine government has made demands that several leading cryptocurrency exchanges ban users from Russia.
All of which means that the return to fortune for Bitcoin might be adversely affected by new regulation over how cryptocurrencies and crypto exchanges are allowed to operate. While Bitcoin has started to become viewed as a credible store of value for a variety of US banks, if it becomes part of Russia’s strategy of combating the West, the cryptocurrency could quickly fall out of favor. But while the short-term future of cryptocurrencies like Bitcoin may be mixed, it’s just another example of how this revolutionary technology is changing the world we live in.
