Bitcoin is falling while gold is rising as investors seek traditional refuges amid the turmoil in Ukraine, undercutting the often-touted argument from advocates that the cryptocurrency is now a digital version of the long-time haven asset.
“Bitcoin is much more of a momentum and risk-driven asset than it is the independent store of value that people want it to become, it’s not there yet,” said Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter.
Gold traded as high as $1,974 on Thursday, the most since September 2020, a year marked by the onset of the Covid-19 pandemic.
The largest cryptocurrency by market value, Bitcoin fell as much as 8.5% to $34,337, the lowest in about a month. It has dropped almost 50% from its all-time high in November.
“Gold is doing exactly what it should be doing right now, but it’s a much more mature asset and it’s got a proven history in these types of conflicts of how it trades,” Essaye said. “This is the first time Bitcoin has ever encountered a potentially major global conflict, and I would expect that the declines will continue as long as stocks are under pressure.”
Russia launched a full-scale attack on Ukraine Thursday. President Joseph Biden promised to imposed “severe” sanctions on the nation. The turmoil has been prompting investors to move their capital into safe havens, with gold reaching its highest peak in nearly two years. Treasuries and the dollar also strengthened.
— With assistance by David Ingles. Read full story on Bloomberg