The lecturer has been advising Russian officials that ‘Bitcoin is the best way to allay the impacts of tough US sanctions against the Kremlin’.
A Russian economist has told Australia’s Micky website that the Russian government may start buying bitcoin heavily next month to avoid incoming US sanctions.
Vladislav Ginko, a lecturer at Moscow’s Russian Presidential Academy of National Economy and Public Administration, anticipates new US sanctions will force the Kremlin into diversifying its cash reserves into Bitcoin.
‘US sanctions may be mitigated only through Bitcoin use,’ Said Mr. Ginko, speaking to Micky from Moscow.
‘Because of US sanctions Russia’s elite is forced to dump US assets and US dollars and invest hugely into Bitcoins.
‘Central bank of Russia sits on $466 billion of reserves and has to diversify in case there is limited opportunities to do it (in the future).’
A ‘Micky’, if you’re interested, is a young, untamed bull, so it shouldn’t come as a surprise that the angle of the article is how Russia’s problems will power bitcoin into the stratosphere for a new raging bull market.
Ginko has been making some insanely bullish posts on Twitter. There’s this one: ‘Investment funds in Moscow are engulfed with requests from wealthy Russians “how to buy for $ several millions Bitcoins”.’ While his reply to another poster is even better: ‘I believe sitting here in Moscow, Russia, that the real factor of Bitcoin adoption will be when Russian government I’m working for will start investing almost $470 billion reserves into Bitcoins. I expect that it’ll be at least $10 billion in the first quarter of this year.’
Ask not what Russia can do for bitcoin…
While that’s a nice narrative, there are some problems with it. Firstly, markets just don’t work like that. The Russian government isn’t going to market buy billions of dollars of bitcoin on Bitfinex; any investment would be slow, careful and likely totally out of sight via OTC. That’s if their accumulation hasn’t already started; ‘news’ generally tends to happen after the fact. What will kickstart the next bull market isn’t a sudden influx of interest from one state, although it might help in the long term. We need to complete this cycle and restore confidence with the general public.
The real story here is how bitcoin is being used and becoming a normal part of life – for so many different parts of life. At various points and to differing degrees today, it has carved out niches as a global payment network, store of value, darkweb currency, instrument for speculation, tool for avoiding capital controls and now, it seems, possibly sanctions.
Russia is strong on technology, and Vladimir Putin has already sought to make various improvements to society through technology. Announced in 2014, the National Technology Initiative is a $2 trillion programme to turn Russia into a global tech leader. The country has been making investments and research into blockchain, too.
Moreover, Putin has stated his intention to seek alternative reserve currencies, since the US dollar has ‘moved away’ from Russia. ‘Those making such decisions are not shooting themselves in the foot, but somewhere more delicate, further up the body. Because there’s instability when it comes to doing business with the dollar, gives rise to a desire – and it’s happening all around the world – to find alternative reserves currencies and create a financial system independent from the dollar.’
While Putin has previously been sceptical about bitcoin and Russia has been circumspect about cryptocurrency, using bitcoin to address the impact of expected US sanctions would be logical and entirely in character. It would hardly even set a precedent, since Venezuelan President Nicolas Maduro launched his Petro amid widespread use of bitcoin in his country.
In short, the story here isn’t Russia powering bitcoin to the moon: it’s bitcoin helping Russia. If there are incidental benefits to the crypto world from that, so much the better.
Red hot news, scorching wit and searing opinion pieces from Crypto Inferno.