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: 
https://dc-charts.com

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!

Source:

https://cryptoslate.com/fake-news-russias-alleged-10-billion-bitcoin-investment/
https://decryptmedia.com/4416/russian-to-buy-bitcoin
https://www.telegraph.co.uk/technology/2019/01/14/russia-plans-tackle-us-sanctions-bitcoin-investment-says-kremlin/
https://bitcoinist.com/russia-ditch-usd-bitcoin-prof/

Photo by Wikimedia commons

Russia thinking about replacing USD with Bitcoin

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Referring to recent news by Micky, it seems like Russia is seriously considering investing in Bitcoin. This could happen as early as next month, told Vladislav Ginko, a lecturer at Moscow’s Russian Presidential Academy of National Economy and Public Administration. 

Bypass U.S. Sanctions

One of the main reasons why Russia considers such a move, would be because of new sanctions by the U.S., or EU. Vladislav Ginko believes that these next sanctions could possibly trigger Russia moving their cash reserves into Bitcoin.

“Central bank of Russia sits on $466 billion of reserves and has to diversify in case there is limited opportunities to do it,” says Vladislav continuing “because of US sanctions Russia’s elite is forced to dump US assets and US dollars and invest hugely into Bitcoins.”

Russia expects new sanctions by the U.S. Government in February this year.

A possible huge price reaction for Bitcoin

If Russia is seriously considering to diversify their Dollar reserves, this could potentially mean a huge price increase for Bitcoin. Ginko is talking about several billion dollars. And that is massive for Bitcoin, as its current daily volume, according to coinmarketcap.com, is about $5 billion. Ginko believes that soon a lot of other countries will do the same, and that “Russia has a brilliant chance to invest into heavily oversold Bitcoin.”

Russian president Vladimir Putin stated on November 2018, that Russia is seeking for alternative reserve currencies. Also, Russia is working closely with China, to develop a new transaction system which would be independent of the U.S. Dollar.

Russia neither positive nor negative about cryptocurrencies

Vladimir Putin along with Russia has never quite condemned cryptocurrencies. The Russian president is one of the few world leaders who hasn’t publicly condemned Bitcoin or crypto in general. Of course, he has stated that investors must be careful operating with these currencies as there are “serious risks” surrounding crypto. Moreover, there were claims of Russia having its own cryptocurrency last year. Putin backed these claims saying “Central Bank of the Russian Federation considers cryptocurrency neither a means of payment, nor a store of value”. Also, he mentioned that this would not be possible by definition. 

Source:

https://micky.com.au/russias-billions-could-trigger-bitcoin-bull-run-next-month/