Mark Mobius on rising bitcoin prices following sanctions against Russia

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Veteran investor Mark Mobius said the recent rise in bitcoin may be due to Russians buying cryptocurrency.

“I wouldn’t be a buyer, but if I were Russian, I would be a buyer,” Mobius told CNBC’s Capital Connection on Tuesday.

“I would say that’s why bitcoin has shown strength now – because the Russians have a way to make money, to make a fortune,” said Mobius, founder of Mobius Capital Partners.

Bitcoin prices rose 10% on Monday as sanctions were imposed on Russian institutions, including banks, in response to the country’s invasion of Ukraine.

Since the invasion began on Thursday, transactions on centralized bitcoin exchanges in both the Russian ruble and the Ukrainian hryvnia have risen to their highest levels in months, according to crypto data company Kaiko.

Bitcoin traded around $ 43,327 in the early hours of Tuesday morning Eastern Time.

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The United States has responded to Moscow’s unprovoked attack on Ukraine with several rounds of sanctions against Russian banks, its central bank, the country’s public debt, Vladimir Putin and Foreign Minister Sergei Lavrov.

Over the weekend, the United States, European allies and Canada agreed to exclude key Russian banks from the SWIFT interbank messaging system, which connects more than 11,000 banks and financial institutions in more than 200 countries and territories.

The White House is also pursuing the personal wealth of Russian billionaires, recently announcing the creation of a task force to focus on their lucrative assets, including yachts and mansions.

If it weren’t for bitcoin, Mobius said, the Russians would have “really problems with all the road closures so they can transfer money.”

Ari Redboard of blockchain intelligence company TRM Labs also told CNBC on Tuesday that Russia would turn to cryptocurrencies in a bid to evade sanctions.

However, crypto cannot be used “on a scale close to resolving the sanctions issue,” said Redboard, the company’s head of legal and government affairs.

“There’s just no liquidity out there that can really affect what Russia is facing right now,” he said.

Redboard also said that most of the liquidity is in large crypto exchanges, which have “stable compliance controls” to monitor transactions that would report suspicious activity.

Where to invest against the background of geopolitical tensions

Mobius called on investors to diversify their portfolios and buy gold as geopolitical tensions spill over into markets.

“Gold is a place where you have to be, as I’ve mentioned for a long, long time, it’s very important to have a little physical gold,” he said.

Gold, a traditional safe haven in times of uncertainty, rose more than 6% in February. Spot gold last traded at around $ 1,908 an ounce.

Mobius also advised European investors to start diversifying from Europe to the United States and some Asian markets. “This is a very good lesson in diversification,” he said.

The pan-European Stoxx 600 lost 4.6% in the last month, and the German DAX index fell 5.6% over the same period, according to FactSet.

– Abigail Ng, Tanaya Machel and Brian Schwartz of CNBC contributed to this report.