In this article, we discuss the 10 cryptocurrencies to watch amid Russia’s attack on Ukraine.
The mainstreaming of cryptocurrencies in the past few years has brought many benefits to the digital economy. However, the questions around the regulation of the industry are starting to pick up more steam as crypto-related hacks, frauds, and money laundering schemes get larger and ever more sophisticated. One of the hottest topics around the crypto world over the past few days has been the use of blockchain technology in state conflict, especially in the context of the Russian invasion of Ukraine.
Russia and the Crypto Market
On February 24, merely hours after Russian President Putin pushed troops into Ukraine, US President Biden imposed economic sanctions on the country, freezing the assets of the five largest Russian banks, estimated to be worth $1 trillion. The European Union has also moved to freeze the overseas assets of Putin and his deputies in a move aimed at forcing Moscow to the negotiating table. However, it has been harder to estimate the impact that these sanctions will have on Russia since it is easy to bypass them by using the unregulated crypto market.
Russia is the third-largest crypto mining country in the world and many of the top developers in the crypto space, even in the United States, hail from Russia, the prime example being Ethereum founder Vitalik Buterin. Russian businesses already invest heavily in the crypto market — around $5 billion per year according to some estimates. The Russian government is developing a digital version of the ruble as well. Ransomware attacks originating from Russia and targeting crypto exchanges are also rising.
In this overall environment and in context of earlier warnings by the US Treasury on the weakening impact of economic sanctions due to the rise of digital currencies, the sanctions have actually triggered a mini-boom in the prices of cryptocurrencies. Even though Bitcoin fell on the day of the invasion, it has since climbed, along with many other alternate coins. The Ukraine crisis has also affected the prices of some of the top stocks for the crypto economy like Visa Inc. (NYSE:V), Block, Inc. (NYSE:SQ), and PayPal Holdings, Inc. (NASDAQ:PYPL).
Photo by Adam Nowakowski on Unsplash
Our Methodology
These were picked from a careful assessment of the cryptoverse over the past few days amid the changing geopolitical situation in Eastern Europe. The details of each cryptocurrency are mentioned alongside a discussion around top companies working in the sector to provide readers with some context for their investment decisions.
Data from around 900 elite hedge funds tracked by Insider Monkey was used to identify the number of hedge funds that hold stakes in each firm.
Cryptocurrencies to Watch Amid Russia’s Attack on Ukraine
10. Travala
Travala is a travel-focused cryptocurrency that is used to book hotels, plane tickets, restaurant reservations, and other travel-related activities. The Travala website which offers the currency is home to over 3 million travel products offered in more than 200 different countries. The network covers almost 90,000 destinations around the globe. Travala has built partnerships with brands like Binance, TripAdvisor, and others. As tensions in Eastern Europe increase, Travala could lose value as pandemic-weary travelers opt out of travel to Russia and neighboring countries.
Those keen to invest in Travala and the wider crypto space should also keep Alphabet Inc. (NASDAQ:GOOG), the parent company of Google, in their sights. Among the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in Alphabet Inc. with 2.9 million shares worth more than $8.5 billion.
Just like Visa Inc., Block, Inc., and PayPal Holdings, Inc., Alphabet Inc. is one of the growth stocks in the spotlight amid rising inflation.
In its Q1 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. was one of them. Here is what the fund said:
“Large-cap tech companies have been resilient through the pandemic—Alphabet Inc. among them. A top contributor, Alphabet’s Play Store and Google Cloud are in demand as businesses accelerate online activity which, along with strong YouTube user growth, is helping stabilize temporarily weaker search ad revenue trends. Through the lens of our disciplined bottom-up research process, we view Alphabet Inc. as one of the best businesses in the world, capable of expanding revenues at a rapid rate for years to come, with a bullet proof balance sheet and an average asking price. It’s a name we’ve owned since 2012 and for which we continue to have high hopes regarding future prospects.”
9. Bowscoin
Bowscoin is a proof-of-work cryptocurrency launched in 2015 that was intended as the cryptocurrency with all the features for gift-giving. The coin is one of the most discussed coins on social media forums in Russia in the past few weeks even though there has been little interest in the currency in the West. It has a market cap of over $17,000 and a circulating supply of more than $5.5 million. As the US places sanctions on Russia for the Ukraine invasion, the coin could assume increased importance as a way to circumvent these sanctions.
Coins like Bowscoin have jumped to prominence through the efforts of firms like CME Group Inc. (NASDAQ: CME), the Illinois-based derivatives exchange that accepts crypto trades on the platform. At the end of the fourth quarter of 2021, 55 hedge funds in the database of Insider Monkey held stakes worth $2.7 billion in CME Group Inc., compared to 64 the preceding quarter worth $2.6 billion.
In its Q1 2021 investor letter, Cooper Investors, an asset management firm, highlighted a few stocks and CME Group Inc. was one of them. Here is what the fund said:
“CME Group Inc. has been owned by the portfolio for five years. CME’s strategic positioning as a monopolistic global financial exchange operator will continue to afford the business a highly attractive margin profile. CME Group Inc. is well managed however we can no longer identify clear value latency opportunities for the management team to execute against and so decided to exit our position.”
8. Monero
Monero is a privacy-centered cryptocurrency. Transactions on the network are untraceable and unlinkable. It is not possible to identify where the transactions originated and it is also very difficult to link two transactions together. Unlike other blockchains, it is harder to map behaviors and activities on the network to certain addresses. As the US considers economic sanctions on Russia, the Monero coin could increase in price as the Russian businesses use the currency to carry out trades not permitted by traditional banks without fear of being traced.
Those who are eager to find more investment vehicles like Monero should consider investing in Mastercard Incorporated (NYSE:MA), the New York-based payments processing firm. Among the hedge funds being tracked by Insider Monkey, Virginia-based investment firm Akre Capital Management is a leading shareholder in Mastercard Incorporated with 5.8 million shares worth more than $2.1 billion.
In its Q4 2020 investor letter, Bretton Fund, an asset management firm, highlighted a few stocks and Mastercard Incorporated was one of them. Here is what the fund said:
“While consumers resumed much of their spending by summer, what and how they used their Visas and Mastercards changed. For obvious reasons, people shifted to contactless payments—one of the Covid-era changes we think is permanent—and replaced travel purchases with online shopping and food delivery. Consumers spent more on their debit cards and less on their credit cards; Visa and Mastercard Incorporated make more per transaction on the latter. They also make more on cross-border transactions that come mostly from international travel, which ground to a halt early in the pandemic. Visa’s and Mastercard’s earnings per share fell by 7% and 16%, respectively, compared to their usual mid-teens growth. We’re not too worried, and we think they’ll catch up nicely in the post-vaccine world. Visa’s stock returned 17.1% and Mastercard’s 20.2%.”
7. Solana
Solana is a cryptocurrency that rose to fame in 2021 as other coins around it crashed. The Solana coin gained over 10,000% in 2021. The Solana coin became popular because the network on which it operates is capable of processing 50,000 transactions per second. Compared to this, the Ethereum network can process only around 45 transactions per second. It is also developing fast into the DeFi and NFT marketplaces. As NFTs become more costly, they are also becoming more useful as money laundering vehicles for Russian oligarchs.
The incredible ascent of coins like Solana is made possible by the bullish crypto stance of firms like Tesla, Inc. (NASDAQ:TSLA), the California-based EV maker. At the end of the fourth quarter of 2021, 91 hedge funds in the database of Insider Monkey held stakes worth $12.9 billion in Tesla, Inc., up from 60 in the previous quarter worth $10.6 billion.
Here is what Baron Partners Fund has to say about Tesla, Inc. in its Q1 2021 investor letter:
“Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, energy storage solutions, and battery cells. Tesla, Inc. stock fell during the quarter as a result of general market dynamics and a potential production slowdown due to parts shortages. A refreshed S/X and China Model Y ramp could also have a negative impact on margins in early 2021. We anticipate strong growth and improved margins driven by new production capacity, manufacturing efficiencies, localization of its manufacturing and supply chain, and maturation of Tesla’s full self-driving technology.”
6. Dogecoin
Although Dogecoin is generally referred to as a “meme” coin, it is somewhat surprising that it has been relevant in Russian for years. The coin first gained prominence during the 2018 football World Cup in Russia. The government briefly allowed the use of the coin as payment during the tournament. Since then, however, people like Elon Musk have taken the coin to new highs. The use of the coin as a tool to promote cyberattacks, which are on the rise as Russia invades Ukraine, is becoming increasingly likely.
Cryptocurrencies have become important to the overall functioning of the economy by the efforts of companies like NVIDIA Corporation (NASDAQ: NVDA), the microchip maker from California. At the end of the fourth quarter of 2021, 110 hedge funds in the database of Insider Monkey held stakes worth $10.4 billion in NVIDIA Corporation, up from 83 in the previous quarter worth $10 billion.
Along with Visa Inc., Block, Inc., and PayPal Holdings, Inc., NVIDIA Corporation is one of the stocks on the radar of elite investors.
In its Q1 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and NVIDIA Corporation was one of them. Here is what the fund said:
“NVIDIA Corporation is the dominant supplier of Graphics Processing Units (GPUs) worldwide. NVIDIA’s GPUs are at the intersection of a number of important computing trends including the movement to the Cloud, artificial intelligence, autonomous vehicles, edge computing, gaming, and more. We previously owned NVIDIA Corporation and sold it in the third quarter of 2020 as the price to value gap closed and our margin of safety was reduced. As with all our MVP companies, we continued to follow NVIDIA closely. Since that time, NVIDIA Corporation reported excellent results and its value has compounded rapidly. The technology selloff at the beginning of the year negatively affected the stock price while our estimate of NVIDIA’s value per share increased. This happy combination of events created a margin of safety and an opportunity to once again add NVIDIA Corporation to the portfolio.”
5. Ripple
Ripple is one of the cryptocurrencies most likely to be affected by the rising political tensions in Eastern Europe. The Ripple coin is used on RippleNet, a cross-border money exchange platform that is used by businesses to act as an alternative to SWIFT payments. As the West discussed placing sanctions on Russia for the Ukraine invasion, there has been increasing talk around banning Russian businesses from SWIFT payments. If this happens, RippleNet could emerge as a viable alternative.
The advantages of using Ripple on the platform include faster speeds, minor fees, and more privacy with regards to transactions compared to SWIFT payments. Another advantage is that over a hundred banks worldwide use the network already, giving these businesses access to traditional banking systems as well. Ripple was founded by Arthur Britto, David Schwartz, and Ryan Fugger in 2012.
4. Litecoin
Litecoin is the most popular Bitcoin alternative in Russia. Amid sanctions, the economic fortunes of ordinary Russians could decline as trade with the West becomes tougher. In this scenario, it may not be viable for these people to invest in expensive coins like Bitcoin, which is the most popular cryptocurrency around the globe and also the most pricey. Litecoin, one of the earliest Bitcoin spin-offs and similar to the parent coin in many ways except transaction speeds, could see a surge in value.
Litecoin was founded by Charlie Lee, a former Google employee. One of the biggest reasons for buying Litecoin is that the network on which it runs offers transaction speeds that are four times faster than the Bitcoin network. Other differences include block generation time, hashing algorithm, and the maximum number of coins.
3. Tether
Interest in Tether has also increased amid the Russian invasion of Ukraine. Tether is a stablecoin and the value of the coin is tied to the US dollar. Since it is tied to a tangible asset, unlike other cryptocurrencies, the coin is less susceptible to price volatility. However, amid the threat of Russian cyberattacks, one of the concerns being raised revolves around Russian hackers buying up huge amounts of the coin and then selling it to collapse the price.
This would hurt the overall crypto system as well since coins like Tether, due to their relatively stable nature, are often used as tokens to trade between different currencies. Conversely, as Russians use the crypto verse to circumvent sanctions, they could also use the coin more and more to convert between different currencies during sanctions.
2. Ethereum
Ethereum is the second most popular coin in the world. It was developed by Vitalik Buterin, a Russian-born crypto pioneer whose net worth is estimated to be in excess of $1 billion. There has been a lot of speculation around Buterin, Ethereum, and their loyalties amid the Ukraine crisis. Vitalik Buterin has come out and blasted Russia for invading Ukraine, affirming that he will not stay neutral in this crisis situation. This statement could face blowback in Russia where Ethereum is one of the most popular coins.
Ethereum is marketed as a more secure and more environment-friendly alternative to Bitcoin. The Ethereum network is presently in the process of transitioning from proof-of-work to proof-of-stake. This would make the network faster than it currently is, making more transactions per second possible.
1. Bitcoin
Bitcoin is the most popular coin in Russia and around the globe. The price of the coin has already dropped by close to 8% since February 23 as the Russian invasion of Ukraine affects world markets. Data from CoinMarketCap indicates that over $150 billion have been wiped from the crypto market since the invasion started. However, as the West prepares to impose sanctions on Russia, the price of the coin could jump as Russians use it as an alternative to the dollar for business.
Bitcoin was developed by Satoshi Nakamoto and launched in 2008. It is one of the oldest coins on the market. It is the most widely used cryptocurrencies in the world, accepted by a majority of exchanges. A lot of Russian businesses already trade using these exchanges.
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This article is originally published at Insider Monkey.