Cryptocurrency markets lack the liquidity necessary to evade Russian sanctions

According to Chainalysis, cryptocurrency markets lack the liquidity needed to evade Russian sanctions. The article offered three separate parameters for calculating liquidity on bitcoin exchanges. Funds stored abroad by sanctioned Russian elites are estimated at $800 billion.

Chainalysis Says Cryptocurrency Markets Are Lacking Liquidity Needed To Evade Russian Sanctions

image source: Reuters

The research, released Wednesday, was based on a 2017 National Economic Bureau study that predicted that Russian oligarchs hold around $800 billion in offshore assets. The study looked at three different metrics to measure liquidity in cryptocurrency markets.

The first technique, known as “free float,” calculates the total value of a specific crypto asset held by people or liquid exchanges to determine liquidity in cryptocurrency markets.

According to the article, after reviewing 19 different exchanges, Chainalysis found that it would be extremely impossible to move that much money without the price of Bitcoin collapsing. The price of Bitcoin would fall by 10% following the sale of $1.5 billion in Bitcoin.

Bitcoin (BTC), Ethereum (ETH) and Tether (USDT) had a float of $296 billion, less than the $800 billion controlled by the Russian elite. Large-scale circumvention of Russian sanctions using cryptocurrencies is “impossible”, according to Chainalysis.

Over the past two months, Western nations have reacted to Russia’s invasion of Ukraine by imposing heavy fines on billionaire businessmen suspected of belonging to President Vladimir Putin’s inner circle. Football teams, stocks and luxury international residences have all been acquired.

Owners of assets that have yet to be confiscated appear to be scrambling to keep them in the face of what some consider to be the most draconian economic sanctions imposed in modern times.

Another measurement approach employed by Chainalysis is the examination of data on crypto-asset inflows to services such as exchanges.

In April, the company was receiving $14 billion worth of crypto daily, up from $20 billion in 2021. That figure jumped to $80 billion in May 2021. At this rate, sanctioned Russian millionaires would need up to ten days of entries to move the bitcoin equivalent. at their value at an exchange where it could be liquidated.

Due to the minimal crypto entries, the use of mixing services that conceal the destination of the funds would also be ineffective. For the uninitiated, mixers are services used by criminals to conceal their operations. On December 5, 2021, the amount peaked at $160 million.

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