Russia`s crypto FUD influence on markets

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Many news outlets have recently posted some controversial headlines about Russia converting their USD reserves to Bitcoin. The initiative behind such an act would be Russia’s willingness to bypass U.S. imposed sanctions using cryptocurrencies. Statement by V. Ginko – a well renowned Russian professor:

Whether or not this is going to happen, it is fundamentally important to understand how this can affect the crypto markets before you do any investment activity.

Difference between exchange and OTC crypto markets

Before we proceed with further analysis it is important to understand the difference between retail and OTC (over-the-counter) markets. The common thing between both markets is that they both allow to buy and sell assets, securities, cryptos etc. The difference is in the way how traders execute their orders. In OTC markets people do their trades in person choosing one explicit party. Exchange markets, on the opposite, use centralized framework and trading system executes order automatically choosing the best possible match for your order.

Why Russia will not buy their bitcoins using an exchange?

Although OTC market seems like a much of a fuss it is better for moving large amounts of money. At the current market stage, crypto has lost most of its mainstream attention and order books are thinner than ever. According to the current data (02.02.2019) of Bitstamp exchange, even 100 million of Russia`s money would inflate Bitcoin price by 25k USD. That makes every next Bitcoin Russia buys more expensive, therefore, they have a large slippage. 10 billion is too many funds even for buying bitcoin gradually due to the low market depth. OTC exchanges almost completely exclude gradual price increase for each bitcoin bought because it is not a centralized system and does not update bitcoin price live. 

Market depth on Bitstamp exchange, Source:

Summary: How should I react to this event?

The most likely scenario is that if Russia is going to buy bitcoin – they will buy it in such a manner that does not inflate bitcoin price. Smartest decision would be to not play this event. It is bold to say that this is not going to influence markets use, however, an immediate bullrun, caused by a Russian investment, is highly unlikely. It is crucial to understand that Russian government has not confirmed this, thus, information is possibly published just to cause market FUD. Be smart and evaluate everything you read with rationale. Make sure to read bestcoininvestments news for unbiased analysis and news to dominate the markets!


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