Bitcoin is getting its time in the sun as chairman of the Russian State Duma Committee on Energy, Pavel Zavalny revealed that payment for oil in Bitcoin (BTC) would be greenlighted.
What a dropped bombshell this is for the digital gold.
It’s hard to wrap my mind around that statement because it was just a few years ago when Bitcoin was the global pariah and not the world’s gas station Russia.
Now Russia has become the global pariah and to maneuver around a tricky political landscape, they have decided to just move the goalposts completely.
This is important for the dollar and the euro which are competitors to Bitcoin.
Those were the currencies that Europeans and other foreigners were used to settle their oil purchases with the Russians in the past.
Not anymore.
US President Joe Biden freezing Russian reserves has had the reverse effect of the Saudis looking to do business in oil without the US dollar and Russia tapping digital gold as their new form of payment or the alternative option of demanding payment of oil in Russian Rubles.
Hindsight is 20/20 and effectively scaring away foreigners from using the US dollar is a giant and transformational victory for cryptocurrency itself.
Historians might look back at this moment in history as the day the dollar hit the high watermark because I highly doubt that China or Russia will ever go back to settling even half a barrel of oil in US dollars.
Throwing fuel on the fire are countries like Hungary whose leader Viktor Orban has refused to stop buying Russian energy doubling down against the West saying that the Hungarian people aren’t footing the bill for this conflict.
The net net of this all is that Russia has received a narrow form of a free pass in markets like that because of the certainty involved in sending equities soaring.
Bitcoin has benefited from the risk-on sentiment with Bitcoin back up to $48,000.
Diversifying into Bitcoin and other currencies will lessen the dependence on dollars and euros issued by “unfriendly states” like the U.S. and the EU—and in the process skirt the sanctions they placed on it.
So then one must deduce that the severity of the sanctions has been reduced and we have clearly seen that flow through the market with the Russian Ruble reversing by 40% to almost pre-conflict levels.
One of the knocks on Bitcoin is the lack of institutional capital that can trigger a war chest of capital.
Bitcoin is now on the receiving end of a dream development with the biggest energy-producing nation ready to conduct business in its currency.
If this isn’t legitimizing Bitcoin, then someone please help me to understand what is?
Simply switching to Bitcoin or Ether would not exempt actors obligated to observe existing EU sanctions, but what if nations convert fiat to Bitcoin only to never convert it back to fiat and just hold a Bitcoin balance continuously.
That wouldn’t rub up against sanctions.
The takeaway from this debacle is that there are so many holes in the western “alliance” that Russian and China are just picking and choosing how they want to pick it apart like dissecting a toad with tweezers.
What this does amount to is a giant tsunami of potential flows into the cryptocurrency system and this puts $100,000 Bitcoin fairly in play again after the interest rate rise killed bullish sentiment earlier this year.
Russia has already partitioned off countries into “friendly” and “unfriendly” which the latter will be required to pay in Bitcoin or rubles.
One must question, is the intelligence about Russia losing really that accurate or was this their plan all along?
Let’s look at the tailwinds behind Russia at the moment.
Europeans like Germans and Hungarians continue to fund the Russian military machine through energy purchases.
Russia is able to skirt financial and energy sanctions using crypto.
The exorbitant current price of oil means significantly higher revenue for Russia in 2022 resulting in a healthier fiscal position.
The Russian government has been able to nationalize factories and infrastructure left by foreign companies.
The Russian Ruble staging a breathtaking turnaround of 40% are all signs that it's business as usual for the Kremlin.
Either way, this paves the way for energy deals with the global gas station to be settled in Bitcoin which is a monumental victory for crypto diehards and could trigger another leg higher for Bitcoin.
