Mark Mobius explains that Bitcoin price is rallying on the heels of the massive purchase of Bitcoin by Russians.
The latest spike in bitcoin price, according to veteran investor Mark Mobius, can be linked to Russians purchasing into the cryptocurrency. Bitcoin price surged by 10% on Monday as more sanctions are imposed on Russia.
“I would not be a buyer,” Mobius said on CNBC’s “Capital Connection” on Tuesday, “but if I were a Russian, I would be a buyer.”
Mobius, a founding member of Mobius Capital Partners, stated, “I would say that’s why bitcoin has owned momentum now — because the Russians have a mechanism of getting money out, getting their wealth out.”
According to crypto analytics provider Kaiko, since the invasion began on Thursday, transactions on centralized bitcoin exchanges in both the Russian ruble and the Ukrainian hryvnia have risen to their highest levels in months.
In the early hours of Tuesday morning, Bitcoin was trading at about $43,000.
The United States has retaliated against Russia’s unjustified aggression on Ukraine by imposing sanctions on Russian banks, the central bank, the country’s sovereign debt, Vladimir Putin, and Foreign Minister Sergey Lavrov.
The United States, its European allies, and Canada agreed over the weekend to cut important Russian banks off from the SWIFT interbank messaging system, which connects over 11,000 banks and financial institutions in over 200 nations and territories.
The White House is going after Russian billionaires’ fortune, recently announcing the formation of a team to go after their profitable assets, such as yachts and homes.
The Russians would be “seriously in trouble with all the closures of the many channels for them to send money out” if it weren’t for bitcoin, according to Mobius.
On Tuesday, Ari Redbord of TRM Labs, a blockchain intelligence firm, told CNBC that Russia will use cryptocurrency to avoid sanctions.
Crypto, on the other hand, can’t be utilized “on a scale that would come close to solving the sanctions problem,” according to Redbord, the firm’s head of legal and government affairs.
“There’s just not enough liquidity to make a difference in what Russia is dealing with right now,” he said.
The majority of the liquidity, according to Redbord, is held by large crypto exchanges with “strong compliance measures” in place to monitor transactions and file suspicious activity alerts.
Where should you put your money in the face of geopolitical tensions?
As geopolitical tensions leak over into markets, Mobius advised investors to diversify their portfolios and buy gold.
“Gold is a good place to be,” he added. “As I’ve stated for a long time, it’s critical to have some actual gold.”
In February, gold, which has traditionally served as a haven in times of uncertainty, increased by more than 6%. Gold was recently priced at roughly $1,908 per ounce on the spot market.
Mobius also recommended European investors to begin diversifying their portfolios outside of Europe, including the United States and several Asian markets. He added, “This is a great lesson in diversification.”
According to FactSet statistics, the Stoxx 600 index in Europe has been down 4.6 percent in the last month, while Germany’s DAX index has plummeted 5.6 percent.