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Bitcoin moved higher Tuesday even amid geopolitical tensions between Ukraine and Russia.
The price of the flagship cryptocurrency ended up more than 2% at $93,803.51, according to Coin Metrics, above the previous intraday record of $93,469.08, reached last week. Share from MicroStrategywhich trades as a bitcoin proxy, rose almost 10%.
The move came overnight to reports that Russian President Vladimir Putin warned the US that the threshold for using nuclear weapons had been lowered in response to President Joe Biden allowing Ukraine to use US missiles to strike military targets in Russia. First, bitcoin moves higher when stocks sell off. However, in afternoon trade, bitcoin advanced as the S&P 500 and Nasdaq Composite pared losses.
Bitcoin rose slightly amid Ukraine-Russia tensions
Bitcoin has benefited from the new enthusiasm for cryptocurrencies after the US presidential election – it is now up 33% for the month. Like gold, crypto assets are also seen by many investors as “non-confiscatable,” a long-term hedge against geopolitical uncertainty.
“The most important long-term correlation for bitcoin is a negative correlation with the US dollar and a positive correlation with the growth of the money supply,” Matt Sigel, head of digital asset research at VanEck, said October 28 on CNBC’s “Squawk Box.”
“Bitcoin is a chameleon,” Sigel added. “The correlation changes over time, it’s hard to predict what the correlation will be in the short term.”
Bitcoin has acted as a safe haven before. Better in the event of a crisis in the regional banking system in early 2023, for example. But since bitcoin is also a risky asset without a long history, with extreme volatility that can benefit short-term traders, some have a hard time arguing that bitcoin will always be attractive. Citigroup, for example, in a note there reiterated the bank’s view that bitcoin does not show store-of-value.
“Gold peaked in late October, almost a week before Election Day,” wrote Citi’s Alex Saunders. “And with risk-on (and idiosyncratic) sentiment supporting crypto, and FX/rates building headwinds for gold, the two are not very correlated in the near term.”
