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Ukraine war causing crypto currencies to rise in price

Posted by John Reed on

Crypto currencies are seeing increased activity in Ukraine and in Russia where converting rubles to foreign currencies is now illegal.

Some cryptoexchanges are refusing to do business with Russians. The US government is considering using whatever authority they have to get cryptoexhanges to stop doing business with Russia.

I guarantee Russia will ban or try to ban using cryptocurrency to convert rubles to crypto. If they did not, almost every ruble on earth would be converted to crypto. As I recently said, the problem with crypto currency is not crypto; it is the word currency. Nations want a monopoly on currency in their country. As the Russia example shows, they want no rubles exchanged. That means they must prevent converting rubles to any currency including crypto.

One of the biggest things crypto needs, although its true believers seem willful about refusing to see it, is that one must be able to get into crypto from traditional currency and out of crypto into traditional currency. It is at that juncture that the US government and others can probably regulate the “unregulatable” crypto currencies.

In this recent increased activity, crypto, which is a tiny currency in comparison to traditional currencies, the price of some cryptocurrencies has gone up. This is a bad thing for those trying to use crypto to get out of their local inflated currency. 

I have frequently pointed out that among inflation hedges, gold and silver are now way overpriced, cars, real estate (although I do not see them falling), and that well-managed foreign currency, which is a wonderful highly liquid inflation hedge, is still a bargain. 

The Russians now have no legal alternative to using crypto to get out of rubles. They will soon lose even that. But Americans can and should convert the currency they fear will inflate for normal national currencies. The seven I recommend are AUD, CAD, CHF, DKK, NOK, NZD, and SEK. Those are quite liquid, legal, and not at all going up in price in relation to the USD. Buying a cyptocurrency that is rising because it is so tiny is a mistake like currently buying junk silver or gold, which are way overpriced.

The way you need to think in inflation is counterintuitive to what you are used to. 

USD-bad

well-managed foreign-good

most non-dollar denominated goods-getting too expensive compared to alternatives like foreign currency or US nickels and pennies

My email is johnreed@johntreed.com.


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