Cryptocurrency trading in Ukraine has risen sharply since the Russian military invaded. After the initial strikes, a Ukrainian exchange recorded an unusual trading volume. Investors have responded massively to the limitations on bank withdrawals and the falling value of the national currency, the hryvnia (UAH).
Ukrainian exchange sees surge in trading
According to data from CoinGecko, the volume of transactions recorded on Kuna, a Ukrainian cryptocurrency exchange, jumped after the initial Russian strikes in Ukraine. This Thursday, February 24, 2022, the platform’s trading volume briefly rose above $4.8 million.
In the days leading up to the Russian invasion, between February 20 and 23, trading volume fluctuated between $775,000 and $2.4 million. Kuna had not seen such trading volume since May 2021, when the price of Bitcoin (BTC), and most altcoins, underwent a severe correction. On the morning of Friday, February 25, the volume contracted to around $2 million.
The Ukrainian population has always been very attracted to cryptocurrencies. According to a study by Chainalysis, Ukraine is the 5th most used country for crypto-assets. One of the reasons for this is the low level of banking among Ukrainians, especially in the most rural areas.
Aware of Ukrainians’ interest in the sector, the government recently passed a law to offer legal status to crypto-currencies. This legislation, which is very different from El Salvador’s Bitcoin law, sets up a clear regulatory framework around crypto-assets in order to promote the emergence of specialized companies in the country.
A reaction to banking restrictions and the decline of the national currency
This sudden increase comes after the restrictions of the Central Bank of Ukraine. In order to curb possible capital flight, the organization has drastically limited bank withdrawals and banned Forex withdrawals throughout the country. The National Bank of Ukraine assured that these measures were “temporary, but necessary” to maintain financial stability. It also froze the official exchange rate of the national currency.
Following the Russian invasion, the hryvnia (UAH), the country’s national currency, had fallen sharply in value. The fiat currency collapsed to $0.033 on Friday, February 25, 2022. In response, Ukrainian investors massively converted fiat currency into cryptocurrency. As CoinGecko shows, internet users visibly bought stablecoins to protect their assets.
On Kuna, the USDT price of Tether briefly rose above 36 hryvnias before stabilizing around 33 hryvnias. The price of the pair remains much higher than its usual level.
A few days before the conflict, the USDT was still trading around 28 hryvnias. The conversion rate of the USDT was even higher than that of the US dollar with the hryvnia, which did not exceed 30 units.
At the same time, the support organizations of the Ukrainian army have received many donations in cryptocurrencies since the attack. Through NGOs, the Ukrainian military received the equivalent of $400,000 in digital currencies in 24 hours, Elliptic recently reported. Organizations like Come Back Alive have managed to raise large sums through crowdfunding campaigns.
