It looks like Russia has invaded Ukraine. The announcement was made early this week and the results are a lot of fear hanging in the air and the price of bitcoin continuing to behave in a bearish manner.
Bitcoin Incurs a Major Slip
The currency was ultimately doing better than it had been in previous weeks. Bitcoin had shot up to $40,000+, and after traveling south during the final two months of 2021, it appeared that maybe 2022 was going to be the time for bitcoin to pick itself up and head back into all-time high territory. Sadly, now it looks like the currency is trading for about $30,000 less than where it was at the end of November, and when things return to normal for the world of crypto is anybody’s guess.
This really brings down the argument that bitcoin is somehow a hedge tool. Many people during the time of the coronavirus pandemic began to view bitcoin as something that could keep one’s wealth stable and steady during times of economic strife. Governments around the world continued to print money as though it grew on trees, and there were many additional stimulus measures added to the global economy designed to give people the funds they needed to stay afloat.
Unfortunately, this has also contributed to the high inflation we’re now seeing. Thus, many individuals now view fiat currency with a distrusting eye. They prefer bitcoin to fiat and think it will keep them safe, but things aren’t quite turning in that direction.
The argument for bitcoin is that it has become “digital gold.” It often draws comparisons to the precious metal and is believed to work not in tandem with standard stocks or other investing tools. However, there are several analysts out there who claim that this is not quite true; that bitcoin is still too much in its infancy to behave in a gold-like manner.
One of those analysts is Vijay Ayyar, the vice president of corporate development at crypto exchange Luno. In an interview, he explained:
Bitcoin is still early in its maturity curve to be firmly placed in the category of ‘digital gold.’
Chris Dick – a quantitative trader at crypto market maker B2C2 – also threw his two cents into the mix, claiming that he has seen stocks and bitcoin move completely in correlation with each other over the past few months. He says:
The correlation between crypto and stocks has been high over the last few months on both inflation-related macro news and the Russia-Ukraine geopolitical situation. This correlation shows that bitcoin is firmly behaving like a risk asset [right now] — not the… haven it was touted to be a few years ago.
Maybe The Currency Isn’t at Gold’s Level
John Roque – head of technical strategy at 22V Research – stated:
Bitcoin, the asset purported to be the answer to every question, has quietly weakened and is notably underperforming its arch enemy: gold.
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