Bitcoin (BTC-USD) passed the $40,000 (£29,848) threshold on Monday after major cryptocurrency platforms Binance and Kraken refused to ban Russian users despite pleas from Ukraine.
Kraken co-founder and CEO Jesse Powell said the platform could not "freeze" Russian clients "without a legal requirement" to do so.
1/6 I understand the rationale for this request but, despite my deep respect for the Ukrainian people, @krakenfx cannot freeze the accounts of our Russian clients without a legal requirement to do so.
Russians should be aware that such a requirement could be imminent. #NYKNYC https://t.co/bMRrJzgF8N
— Jesse Powell (@jespow) February 28, 2022
The world's largest crypto made a reverse, rising over 4% to $40,982 after declining 3% to $38,254 on Monday afternoon in London.
Bitcoin backers claim the so-called "digital gold" has been behaving as a safe haven asset in "turbulent" times.
"It goes without saying the defining characteristics of bitcoin allows it to act as a safe haven during turbulent times," said Paolo Ardoino, CTO of BitFinex.
"In these uncertain times, we have seen an uptick in the utility of bitcoin and other cryptocurrencies in raising funds for legitimate civilian organisations that are helping people who are displaced or in danger.
"The borderless and censorship-proof nature of bitcoin allows donors to bypass traditional financial institutions that could ordinarily block payments to these organisations."
However, despite 'safe haven' claims bitcoins has been fluctuating more like any other traditional asset. The claim of 'digital gold' isn't sticking for many as actual gold continues to rally.
Cryptoassets like bitcoin have emerged as an important alternative crowdfunding method during the crisis.
Analysts say at least $20.9m has so far been donated to the Ukrainian war effort through anonymous cryptocurrency donations.
Research from blockchain analysis company Elliptic showed the Ukrainian government, NGOs and volunteer groups raised funds by advertising their bitcoin wallet addresses online.
On Saturday, Twitter (TWTR) accounts belonging to the Ukrainian government posted pleas for crypto donations. The addresses listed in the tweets received $13m across 17,451 transactions to date, the company said.
Stand with the people of Ukraine. Now accepting cryptocurrency donations. Bitcoin, Ethereum and USDT.
BTC - 357a3So9CbsNfBBgFYACGvxxS6tMaDoa1P
ETH and USDT (ERC-20) - 0x165CD37b4C644C2921454429E7F9358d18A45e14
— Ukraine / Україна (@Ukraine) February 26, 2022
Over the weekend, the UK, the European Union, the US and Canada agreed to cut off some Russian banks from the Swift network — a global payment system that connects international banks and facilitates cross-border financial transfers.
Russia’s central bank is also being cut off and blocked from deploying its international reserves.
In response, Russian president Vladimir Putin ordered his country’s deterrence forces — which includes nuclear arms — be put on high alert.
Britain also imposed separate measures on the Central Bank of Russia, Russian National Wealth fund and the country's Ministry of Finance on Monday.
Meanwhile, gold (GC=F) has been gaining in popularity as a safe haven after Russia’s invasion of Ukraine drove financial and commodity markets into a slump. Spot gold rose 1.1% to $1,909 a troy ounce.
Bitcoin enthusiasts have long touted it as a safe haven to hedge against inflation and other risks in traditional markets, often comparing it to gold.
So far gold has outshined "digital gold" as a safe haven as western nations ramped up punitive sanctions on Moscow to isolate it from the global financial system.
Last week, gold hit a one-year high as investors flocked to the safe haven, rising 3% $1,973 an ounce as bitcoin tumbled to its lowest level in a month, crashing 10% to $34,046 after Russia invaded Ukraine.
Smaller cryptocurrencies that usually move in tandem with bitcoin also edged higher.
Read more: How economic sanctions work
It comes as US investment bank JP Morgan (JPM) earlier this month argued in an analysis that bitcoin's price is overvalued and pegged its "fair-value" at $38,000, around 12% below its then price.
However, senior economist Steve Hanke — a former economic adviser to the Reagan administration — explained to Yahoo Finance in an interview last year that there is difficulty in deriving a value for bitcoin.
"From a high theory perspective you end up with a bitcoin that does have a price, that is objective and we know what it is, but we don't know it's fundamental value and my guess is it’s probably zero," Hanke said.