Tensions between Russia and Ukraine benefit gold, not bitcoin (BTC)

Last Thursday, bitcoin fell more than 7% to trade at $40,500, posting its biggest daily decline since Jan. 21. Indeed, reports of firefights between Ukrainian forces and pro-Moscow rebels pushed investors away from risky assets like cryptocurrency. This situation also benefited gold, which briefly regained its status as a safe haven in times of crisis.

Bitcoin behaves more like a high-growth tech asset

While bitcoin posted a loss of more than 7%, gold rose almost 2% to trade at $1,902 an ounce, its highest level for eight months. Bitcoin’s fall also coincides with that of tech stocks, with the S&P 500 losing more than 2% on the evening of February 17. Senior analyst at Oanda, Edward Moya says Wall Street has gone into mode de-risking complete and bitcoin pays the price. He attributes the fall in cryptocurrency to fears over geopolitical issues and potentially aggressive tightening by central banks

« A month ago, nobody wanted to touch gold. Now gold has suddenly become the flavor of the month as investors scramble to find safe havens as geopolitical risks mount and fears that central banks are going too far in policy tightening monetary increase “, did he declare. Bitcoin therefore struggles to prove its ability to serve as a safe haven during current geopolitical issues. For now, it looks like cryptocurrency is behaving more like a high-growth tech asset.

A situation that comes from the increased interest of institutions for bitcoin

Since the March 2020 crash, institutional interest in bitcoin has only grown. While this increased adoption has legitimized bitcoin as an asset, it has also made cryptocurrency more sensitive to trends in risk-off/risk-on in traditional markets. Consequently, analysts fear the intensification of tensions between Russia and Ukraine. ” Bitcoin is the ultimate risky asset, and an invasion of Ukraine would keep cryptocurrency selling pressure an additional 10-15% in the near term said Mr. Moya.

The strong correlation between tech stocks and bitcoin exposes the latter to significant price drops in times of crisis as illustrated by the tensions between Ukraine and Russia. This inevitably leads to selling pressure on the cryptocurrency in favor of safe havens such as gold.

Source : CoinDesk

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Luc Jose Adjinacou

Far from having dampened my enthusiasm, an unsuccessful investment in 2017 on a few cryptos only increased my enthusiasm. I therefore resolved to study and understand the blockchain and its many uses and to relay with my pen information relating to this ecosystem.

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