The issue of Bitcoin (BTC) as a safe-haven asset or not is not an issue. It used to be a hot topic at one point. No consensus was found but before the pandemic, BTC often acted as a safe haven asset compared to after the post -pandemic which often followed the stock market.
Today the price of Bitcoin fell further up to the $ 34,000 price level driven by the increasingly tense Russia-Ukraine conflict. But a different thing applies to the price of gold. The price of gold continued to strengthen, raising the question of whether BTC is a safe haven.
Bitcoin prices fell nearly 11% from Wednesday’s highs. Not only expect the BTC to return above the $ 40,000 resistance level but the BTC price redeems the key support level of $ 35,000 when Russia declares war on Ukraine.
On the other hand prices soared more than 3% as market players flocked to seek protection of their investments. This highlights that the correlation between BTC and gold is fading. The price of gold has risen about 8% yet BTC has lost almost 1/3 of its value.
This loss in Bitcoin is in line with the technology sector in the Nasdaq index which fell about 22%. Concerns over rising inflation have also seen the market tout Bitcoin as a potential inflation hedge also unreachable as its price continues to fall as inflation rises.
Gold, on the other hand, trades close to the annual inflation level in the U.S. which had jumped 7.5% in January.
It should also be noted that the fall in prices in the crypto market was also driven by the ‘hawkish’ announcement from the Fed that it had planned a rate hike in March.
The market remains the main focus of geopolitical developments at the moment.
