Sanctions Are a Good Thing? Why Bitcoin, Ethereum, and Dogecoin Are Recovering Nicely Today


What happened

When investors check their watch lists for daily price action in the crypto world, Bitcoin ( BTC -1.39% ), Ethereum ( ETH 0.33% ), and Dogecoin ( DOGE -0.38% ) are three of the top cryptocurrencies most often looked at for an idea of which direction the winds are blowing on a given day. As of noon ET today, these three top tokens have appreciated 2.6%, 4%, and 2.9%, respectively, over the past 24 hours. 

These strong moves higher are noteworthy for a few reasons. From a macro level, global macroeconomic uncertainty related to geopolitical tensions between Russia and Ukraine remains high. As of noon ET, all three major indexes traded lower on these concerns. However, the crypto market overall has risen dramatically, driven by outperformance from these three top tokens.

Digital tokens appear to be coming out of a computer screen.

Image source: Getty Images.

Bitcoin received a boost from investor recognition that sanctions may be more limited against Russia than previously thought. Additionally, it appears crypto is receiving a boost from news that Russia may be removed from the SWIFT payment network, a move that could boost crypto transaction volumes in the near term.

Bitcoin, Ethereum, and Dogecoin all also saw adoption pick up today. Sling TV announced that it would accept these three tokens, among others, for payment. News that a Dubai-based restaurant has opened with a Dogecoin theme also appears to have some investors excited. 

So what

The macro environment is starting to settle down, or at least investors appear to be better able to understand the risk-reward of crypto in the context of these concerns. Perhaps there’s an argument that can be made that economic sanctions could boost the value of these digital payment networks. Sometimes, bad news can be good news. Today, crypto investors appear to be interpreting the geopolitical environment as such.

Continued adoption of crypto via various corporate entities continues to drive a bullish long-term trend for investors keen on holding Bitcoin, Ethereum, and other more speculative tokens such as Dogecoin right now. Should adoption continue to increase, perhaps these near-term market-related headwinds will be an afterthought in short order.

Now what

To be sure, cryptocurrencies are likely to remain volatile assets to hold through these trying times. For top tokens such as Bitcoin and Ethereum, often thought to be among the most defensive cryptocurrencies, this holds true. For Dogecoin, this volatility risk is obviously elevated further. Accordingly, these digital assets remain risk-on trades that many investors may want to be careful with.

That said, the market appears to have an interesting take on the geopolitical issues we’re seeing right now. It’s entirely possible that investors could refocus on the crypto sector as a way for Russia, or other governments, to counteract the centralization in the global payments system. Whether this turns out to be a turning point for the market, or merely a small blip on a longer-term downtrend, remains to be seen. However, today’s price action is certainly intriguing to watch and warrants further investigation from investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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