Bitcoin Latest Price Drop Suggests It’s Not ‘Digital Gold’ for Everyone

Russia's invasion of Ukraine has shown that the criptocurrency might not be the safe haven backers think it is.

Some digital-asset investors have previously described bitcoin as "digital gold", referring to the idea that it could serve as a "store of value" similar to that of the precious metal and would hold its value in times of economic turmoil.

On the week, the price of the digital currency is down.

After dipping below $34,400 on Thursday, the world's largest coin by market cap has struggled to break above the $37,000 mark in the last 24 hours. The U.S. President imposed new sanctions against Russia.

The price of gold is at its highest level in over a year. The precious metal is up 1.4% on the week and reached a spot price high of $1,974 today.

The CEO of Panxora.io said in an email that gold has proven to be better suited for this crisis because it has shown itself to be better at protecting against inflation expectations.

"With geopolitical forces top of everyone's mind, today we see a risk-off sentiment and a flight to gold, Swiss Francs and the Japanese currency," said a trader at Eqonex in an email.

"The safe-haven assets are bid, while in high-risk assets we will see continued downward pressure as risk-off continues," Keohane said.

Smith says that in the coming weeks the dynamic might change.

The energy products are expected to remain strong as the West announces sanctions. This should cause a change in the relationship between the two markets and cause a rise in the price of bitcoin over the next two to three months.

Smith said that the catalyst for this would be the acceptance that inflationary pressures are likely to continue rising in the medium term, causing continued cost-of-living increases and continued strains on Western government finances.

The price of oil exceeded $100 a barrel for the first time in more than a year.

Given Russia's importance to the energy sector, it is no surprise to see gas and oil trading at hugely elevated levels.

The comments from analyst Conor Keohane have been added.

Source: www.coindesk.com