Cryptocurrencies are becoming one of the most popular investment instruments in Russia. Yuri Mazur,the head of the data analysis department of CEX.IO Broker, expressed his opinion on this topic.
Speaking about the reasons for the growth in investment demand forcryptocurrencies in Russia, it is worth noting the fall of this asset class in February 2020 against the backdrop of the onset of the COVID-19 pandemic, which made it possible to buy different cryptocurrencies at minimum values from about January to April 2019, depending on the specific asset.
Also a likely factor in the growth in demand forcryptocurrencies in Russia, especially on the leaders in the stability of capitalization over the past 1.5-2.5 years, was the collapse of the oil market amid a pandemic, which led to another fall of the ruble against most freely convertible currencies. It is possible that Bitcoin and Ethereum have increased their attractiveness in the eyes of investors as a hedge against inflation and devaluation risks.
Also in 2020 it is already possible with confidenceto say that cryptocurrencies are not the prerogative of only crypto enthusiasts and members of the unofficial cryptocurrency community. Bitcoin has long been widespread, including among institutional investors. The availability of purchasing cryptocurrencies has also increased dramatically over the past three years. Therefore, one should not be surprised at the popularity of this asset class among traditional investors.
As for Ethereum, its investmentThe appeal may have been largely dictated by the network's high congestion, which has helped miners on its network as early as September of this year earn more than $350 million since the start of 2020, more than double the total value of Bitcoin transaction fees over the same period.
Also with the rising prices of cryptocurrencies with PoW consensusincreased mining profitability excluding transaction fees. For example, in the bitcoin network, the cost of mining one bitcoin on large mining farms varies from about $ 4,500 to $ 7,500, depending on the cost of a kilowatt-hour of electricity. Therefore, one of the means of earning money on cryptocurrencies for investors could be mining.
Taking into account the current trend in the cryptocurrency marketthe probability of its further growth by the end of 2020 is quite high. Therefore, there is a great chance that the popularity of cryptocurrencies will grow among Russian investors, including professional ones. Also, the weakness of the Russian ruble may have a positive impact on the rate of cryptocurrencies against the ruble.
In addition, the further development scenarioThe COVID-19 pandemic can have a significant impact on the rate and prevalence of cryptocurrencies both among investors and among broader groups of citizens. Should the second wave lead to the re-introduction of severe restrictions, including the temporary closure of businesses in the service sector, this could force the government to resort to more drastic measures to stimulate economic activity in the Russian Federation. And this, in turn, will mean a more significant distribution of money to the population and business than in the first wave of the pandemic, which could increase the pressure on the ruble and lead to its further decline towards freely convertible currencies.
In this case, cryptocurrencies can receive additional demand as an insurance asset along with gold.
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