The recent events in Russia have shaken the world and raised many questions about the future of the country and its economy. The attempted coup by Yevgeny Prigozhin, the leader of the Wagner mercenary group, against President Vladimir Putin and his military leadership has plunged Russia into a state of uncertainty and instability.
Prigozhin, who accused the Russian army of attacking his forces in Ukraine, vowed to march on Moscow with his 50,000 fighters and seize power. He later backed down after talks with Belarusian President Alexander Lukashenko, but his actions have exposed the fragility of Putin’s regime and the discontent among some of his allies.
Russia is one of the largest economies in the world, with a GDP of $1.7 trillion in 2022. It is also a major exporter of oil and gas, which accounts for about 60% of its exports and 40% of its budget revenues. Therefore, any political turmoil in Russia could have significant impacts on the global energy markets and the stock prices of energy companies.
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For example, after Prigozhin announced his rebellion on Friday, June 23, oil prices surged by more than 4%, reaching their highest level since October 2021. This was due to fears that Prigozhin’s forces could disrupt Russia’s oil production or exports, or that Putin could retaliate by cutting off supplies to Europe or other countries. Oil companies such as ExxonMobil, Chevron, BP, Shell, and Total saw their shares rise as well, as they benefit from higher oil prices.
However, not all stocks reacted positively to Russia’s civil uncertainty. Some sectors that depend on trade or investment with Russia could suffer from reduced demand or increased risks. For example, European automakers such as Volkswagen, BMW, Renault, and Peugeot saw their shares drop on Friday, as Russia is one of their largest markets. Similarly, technology companies such as Apple, Microsoft, Google, and Facebook could face challenges in accessing or operating in Russia, as the country has imposed strict regulations and restrictions on foreign tech firms in recent years.
Russia is also a major player in the crypto space, with an estimated 10% of global crypto users and miners based in the country. According to a report by Chainalysis, Russia ranked third in terms of crypto adoption in 2021, behind Vietnam and India. The country has a large and active community of crypto enthusiasts, developers, traders, and investors, who use crypto for various purposes such as remittances, savings, payments, speculation, or evasion of sanctions.
Therefore, any political instability in Russia could have significant impacts on the crypto market as well. On one hand, some crypto users could see crypto as a safe haven or a hedge against inflation or currency devaluation in times of crisis. This could increase the demand and price of crypto assets such as Bitcoin, Ethereum, or stablecoins. On the other hand, some crypto users could face increased risks or challenges in accessing or using crypto services in Russia. This could reduce the supply or liquidity of crypto assets or cause disruptions or delays in transactions or transfers.
For example, after Prigozhin announced his rebellion on Friday, Bitcoin prices spiked by more than 5%, reaching over $31,800 for the first time since May 2023. This was due to increased demand from Russian crypto users who sought to protect their wealth or move their funds out of the country amid uncertainty. However, some Russian crypto exchanges such as Binance and EXMO reported technical issues or delays in processing withdrawals or deposits on Friday and Saturday, as they faced increased traffic or pressure from regulators or banks.
Russia’s civil uncertainty has significant implications for the global markets, especially stocks and crypto. The situation is still evolving and unpredictable, so investors and traders should be cautious and vigilant about any changes or developments that could affect their portfolios or strategies. As always, it is important to do your own research and due diligence before making any financial decisions.
