Bitcoin supporters have long claimed that the cryptocurrency has a lot in common with gold.
They envision a world where merchants flock to it in times of stress and use it to store value over time.
Now, Russia’s war on Ukraine, which has rocked markets, is testing that argument in real time. The problem? Supporters and skeptics say this proves their point.
The price of gold has risen nearly 5% since the invasion of Ukraine two weeks ago. In a short time, it can surpass the all-time high of $2,072 per troy ounce reached in August 2020.
Bitcoin is trading about 4% higher. It rose Wednesday after President Joe Biden signed an executive order instructing the US government to examine the risks and benefits of creating a digital dollar.
Still, it is seeing much larger swings than gold and remains more than 40% below the record set last November.
Cryptocurrencies have held up better than traditional stocks since the beginning of the war. In the past, trades were more correlated.
That’s because aggressive sanctions that cut Russia off access to the global financial system have raised the stakes that some countries and institutions will begin to look more seriously at alternative ways of moving money around the world. Cryptographic networks benefit.
“The reason he kept a little [seu valor] is that the market sees it as an alternative to traditional finance,” Lux Thiagarajah, head of trading at the BCB Group, told me.
The number of trades exchanging Russian rubles for bitcoin has increased since the hack, according to data from Arcane Crypto.
While it is still only a small part of global transactions, it supports a broader narrative that cryptocurrencies have real value.
“We can definitely see that some Russians are using bitcoin as a hedge and to protect their savings,” said Marcus Sotiriou, an analyst at GlobalBlock. This reinforces “the idea that bitcoin can act as digital gold,” he added.
But Thiagarajah, from Grupo BCB, has a contrary opinion. He emphasized that Russians who turn to bitcoin are very different from investors who see it as a safe bet. Its price remains extremely volatile, which does not inspire confidence among institutions that want to keep wealth.
“We don’t see bitcoin as digital gold,” he said. “Gold is, by definition, a safe haven.”
Analysts at JPMorgan have calculated that if investors start treating bitcoin like gold, its value could soar to $150,000, roughly four times its current level.
However, the war in Ukraine does not appear to be a turning point, as the debate continues.
Source: CNN Brasil
I am Sophia william, author of World Stock Market. I have a degree in journalism from the University of Missouri and I have worked as a reporter for several news websites. I have a passion for writing and informing people about the latest news and events happening in the world. I strive to be accurate and unbiased in my reporting, and I hope to provide readers with valuable information that they can use to make informed decisions.
