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According to Vladislav Ginko, a professor at the Russian presidential academy of the National Economy and the Public Administration of Mosco, the new cycles of US sanctions will push Russia to invest in Bitcoin. He said he recently appeared on TV and Russian state radio providing economic commentary and saying that much of his recent work was in persuading Russian officials that bitcoin is the best way to mitigate the impact of new sanctions. on Russia. If this is the case, it could be huge.
The idea that a state-level actor enters a cryptocurrency is really inevitable and when it happens, will push the bull market to new extremes.
Russia is adopting bitcoins:
If a country begins to adopt bitcoin as a percentage of its foreign strategic reserves, then Russia may be the first candidate for this to happen. Recently, Russia has drastically increased the number of gold reserves. Now gold is currently about $ 41.2 million a tonne, in the last few months of 2018 Russia bought about 92 tonnes or $ 3.8 billion gold by bringing the reserve back to gold. total gold in Russia at 2066 tons or about $ 85 billion gold.
Russia is gradually moving away from the dollar and the dollar is also moving away from Russia. The United States has been very opposed to Russia, so it is not surprising that they would not want to use the currency of a country that is continually hostile to them. Russia's cash holdings in the United States declined from $ 96.1 billion in March 2018 to $ 14.4 billion in September 2018. We do not have a current number on this, but it continues to decline until it is completely free from availability in US foreign currency. The Kremlin, of course, fears that US sanctions can end up freezing a significant part of the country's international reserves and that it would be a terrible situation for Russia and since sanctions continue to be punished against Russia they are rightfully paranoid and probably not it's a bad idea to explore alternative options.
How would the bitcoin markets affect:
Currently, the Russian Central Bank has about $ 460 billion in gold and foreign currency assets. So seeing them diversify them into bitcoins could be very interesting. Even if it happens, Russia would buy it on the OTC market if we imagine that Russia is going to take only 1% of the assets that would be $ 4.6 billion invested in bitcoins, this is a large amount of money.
So the OTC statement actually ignores the reality of the markets because those $ 4.6 billion equals more than 1.2 million bitcoins at the current price. However, OTC markets would find it difficult to meet such orders quickly. Then the OTC branches will have to go on regular exchanges and buy more bitcoins and this would certainly have an effect on the market. Suppose that if Russia is able to fulfill all of its orders through some magical OTC banks that have enough bitcoins to meet that demand, it will probably be most of the OTC bitcoins available on the markets. So, OTC banks will have to go on regular exchanges again and buy more bitcoins to put their stocks together.
The sad truth of the current state of world affairs:
The sad truth is that the system that the financial system was mainly led by the United States has been used as a financial weapon against other countries. Finance and money have been armed and this is exactly what is happening. Predatory lending against poor countries, for example sanctioning regimes, etc. It's all one-sided and hypocritical, but bitcoin does not matter.
We are currently seeing a situation in which the United States is forcing Europe to do things that Europe does not necessarily want to do and therefore in response to France, Germany and other people who do not always want to be the dog that follows the guide of America, are proposing some of their solutions to get rid of a financial system dominated by one country. So France and Germany have announced they are looking at a new international trading system outside of US control. Germany would probably include Russia in this because they are such important partners who were not officially part of the announcement and just speculations.
The French finance minister Bruno Le Maire or Mr. Bitcoin, as they call him in France, have accepted the general idea with Germany. He said that we are determined to work on an independent European or Franco-German financial instrument that will allow us to avoid being the collateral victims of US extraterritorial sanctions. These countries that are the closest allies of the United States are looking for alternatives.
Interestingly, they do not need a new SWIFT network, they could simply use bitcoins. It would be a totally new level if all the major economies in the world started using bitcoins to interact with each other in terms of international transactions. Now, the reality of Russia investing or not investing in bitcoins, we can definitely see the case of use.
If you want to talk about the fear of losing, wait for Russia to announce that it will buy 1.2 million bitcoins. Do you think Japan will sit back to watch Russia devour all the bitcoin, do you think China sit down? This type of FOMO at the country level could be unimaginable when it comes to doing so. We could see countries literally adding hundreds and thousands of bitcoins to their strategic reserves and for these countries it is not a huge amount of money.
What did he do the same? Tell us in the comments section below.
