Bitcoin Drops As Russia Invades Ukraine, Crypto Correction, Oil Above $100
Bitcoin dropped to $35k as Russian forces entered Ukraine. Gold rose to it’s highest level in a year and oil trades above $100. Most altcoins lost close to 10% as we entered an apparent correction.
The geopolitical situation in Ukraine has come with a nasty surprise for Bitcoin apparently. Although the correlation between tech stocks and crypto coins had been apparent for a while now, the MSM (mainstream media) pointed out that in times of global anxiety, investors aim for gold and oil rather than Bitcoin as a ‘safe haven’ asset.
The question thus looms: is Bitcoin’s safe haven label in danger?
Gold versus bitcoin
In the past few years as all news revolved around Covid and inflation, there seemed to be a race ongoing between gold and Bitcoin as the ultimate safe haven. This is because gold has for generations of traders been an asset that holds value over long periods and is used to hedge against market downturns.
Bitcoin is still quite young and unproven as an investment, but cryptocurrency speculators used it to store value and hedge against corrections and recessions, certainly as central banks were seen printing fiat money at record numbers, deflating traditional currencies.
In recent days however, as tension between the US, Russia and Ukraine grew and the threat of war loomed, Bitcoin was falling while gold rose. However, it also means that if calmness returns to markets, Bitcoin should rise in correlation with tech stocks then.
Analysts seemed to agree
In a tense situation, investors will prioritise commodities such as gold and crude oil rather than riskier stocks and cryptos
Griffin Ardern, a volatility trader from crypto-asset management company Blofin commented.
Antoni Trenchev, Nexo co-founder and managing partner, echoed this point. He said:
Bitcoin’s inability to hold $40,000 amid heightened Ukraine tensions means $30,000 is back in play. Geopolitics has, for now, replaced inflation as the primary driver of both traditional and crypto markets.
#Bitcoin is not digital #gold, it is digital fool's gold. In fact, since the price of Bitcoin is negatively correlated to the price of gold, it is a digital anti-gold. I'll be debating this LIVE with @RichardHeartWin. Make sure to secure your place here: https://t.co/33I8XZEH4l— Peter Schiff (@PeterSchiff) February 22, 2022
Even traditional market analysts like Holger Zschaepitz of German daily Die Welt said:
Looks like bitcoin will not be a safe haven in geopolitical crises. Digital gold (bitcoin) has plummeted…while gold has risen. Correlation between digital and analog gold is now even negative. The narrative that digital gold is a better way to escape has not panned out in Ukraine.
Peter Schiff, known to the Bitcoin maxis as the ultimate ‘gold bug’ has been tweeting like crazy this week.
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