Vladimir Putin had prepared his plan well before invading Ukraine. He has been deleveraging Russia for years and accumulating foreign exchange reserves year after year. At the beginning of this year 2022, Russia had 640 billion in reserves.
Putin thought he was safe from American and European sanctions because this sum represents 23 months of imports for Russia. Putin would have had time to wage his war in Ukraine, to take control of it, before hoping that the international community would finally accept the situation.
The problem for Putin is that the West was united against his invasion of Ukraine and responded with nuclear economic and financial measures. Measures that undermine the economic fortress that Putin thought he had built for Russia. The problem is that 16% of Putin's reserves were in US dollars and 32% in euros. De facto, half of Russia's reserves are no longer usable after these sanctions. This figure rises to 60% as other currencies held by Russia are no longer usable. Russia also has to rely on China to support it as it holds 17% of its reserves in yuan.
Of Russia's $640 billion in reserves, $130 billion is in gold. Russia, therefore, has full control over only 20% of its reserves.
When a country faces economic and financial sanctions from America or Europe, whether justified or not, it is completely stuck. A country like Russia can probably hold out longer than a small country in the economic sense.
This is where the value of Bitcoin will become apparent to more and more nations in the future. Indeed, Bitcoin offers something unique in this respect. Bitcoin cannot be controlled and therefore gives you more freedom than those fiat currencies. Adding Bitcoin to your reserves will become a necessity in the future. More and more nations will make this choice.
So what is happening now with the financial and economic sanctions against Russia seems to me to be something extremely Bullish for Bitcoin in the medium and long term. No one can be happy about this war, but it is in these dark hours that the need for an uncensored global P2P payment system like Bitcoin becomes apparent.
And this for individuals as well as for nations.
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