with a global conflict underway, gold (gc=f) has revived its status as a safe haven in times of turmoil.
but bitcoin? not so much.
Reading: Russia-ukraine crisis burnishes golds safe-haven shine as bitcoin …
On Thursday, bullion rose close to $2,000 per ounce, its highest level since 2020, after Russian forces struck multiple targets in Ukraine, prompting investors to flee risky assets. meanwhile, the us The dollar, the world’s main reserve currency and another safe haven during market pressure, is gaining ground against a broad basket of currencies.
However, bitcoin (btc-usd) is behaving like the rest of the risk-sensitive market, which means its price is falling like a rock. Despite some crypto investors touting it as a safe haven, bitcoin’s drop of more than 6% during the session underscores how the market largely views it as a risky asset.
Volatile markets show that “there is no place to hide, not only for bitcoin but for many of the altcoins that are also falling,” coindesk’s emily parker recently told yahoo finance live. “This challenges this narrative that bitcoin is a unique asset because it behaves like stocks.”
The price of the leading crypto token has plunged this week as Russia’s military campaign against Ukraine escalates.
“Bitcoin is often referred to as ‘digital gold’ because it is seen as a safe haven in times of turmoil, one that is uncorrelated to other financial markets,” said Nigel Green, CEO and founder of Devere Group. in a statement.
“however, in the last day or so its price has taken a hit, along with the stock market, which also falls during more volatile periods. As such, Bitcoin is currently considered a risky asset, along with stocks,” Green added.
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But ever since the Federal Reserve began hinting at tighter monetary policy, bitcoin’s levels have been dictated by the mood of stock investors. its 60-day correlation with the s&p 500 index (^gspc) hit an all-time high on wednesday, according to data from coinmetrics.
“This is not surprising,” Noelle Acheson, head of market research at crypto prime broker Genesis Trading, told Yahoo Finance. general market uncertainty over monetary and geopolitical policy dominates higher-yielding assets, especially cryptocurrencies.
He added that it was inevitable that bitcoin would eventually “decouple” from stocks, but there’s no telling when that might happen.
Other highly traded tokens such as ether (eth-usd), dogecoin (doge-usd), and cardano (ada-usd) fared even worse, falling by double digits on the day.
Another reason bitcoin and other digital currencies don’t hold up, according to some market watchers, is because they’re considered “more liquid” and trade non-stop. no matter what, investors can sell it immediately, said baxter hines, chief investment officer with digital assets at honeycomb.
Many traders consider both gold and cryptocurrencies to be investment hedges against inflation. Whether bitcoin helps investors save their assets from inflated prices has yet to be proven, but a recent survey by charles schwab suggests many investors believe it.
Nearly 26% of investors hedge against inflation with cryptocurrencies or other digital assets, while 23% use gold to do so, the online broker discovered.
Meanwhile, Western sanctions against Russia are emerging as a secondary concern. The Biden administration took steps this week to punish Moscow financially, with the aim of blocking access to foreign capital. but the relative anonymity and decentralization of cryptocurrencies may help Russian actors evade sanction efforts.
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Tracking flows on platforms that facilitate the buying and selling of cryptocurrencies can be tricky. last year, the us the treasury department sounded the alarm that cryptocurrencies posed a serious threat to the us sanctions program and that the us. officials needed to educate themselves on the technology.
Dani Romero is a reporter for Yahoo Finance. follow her on twitter: @daniromerotv
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david hollerith covers cryptocurrencies for yahoo finance. follow him @dshollers.
read the latest financial and business news from yahoo finance
read the latest cryptocurrency and bitcoin news from yahoo finance
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