Bitcoin (BTC) fell to fresh lows on Feb. 22 as the aftermath of Russia’s expected incursion into Ukraine triggered more market woes.
Gold comes to the rescue as Bitcoin wavers
Volatility had been high as Russian President Vladimir Putin delivered a speech lasting almost an hour on the state of the conflict in Ukraine. Putin had ended by recognizing the two breakaway republics in the country’s east, subsequently ordering Russian troops into what is still officially Ukrainian territory.
Stocks and risk assets fell as a result, with Russian companies predictably suffering as nerves over full-scale war escalated.
The Russian ruble fell in tandem, passing the 80-per-dollar mark and encroaching on its record lows of 85.6 from 2016. Sanctions from the West were expected later on the day, likely fuelling further losses.
A surprise winner was gold, which managed to avoid losses to shore up its safe-haven status — unlike Bitcoin.
“Looks like Bitcoin will not be safe haven in geopol crises,” markets commentator Holger Zschaepitz reacted.
“Digital gold (Bitcoin) has plummeted to $1900/oz. Correlation between digital & analog Gold is now even neg. Narrative that digital Gold is better way to escape has not panned out in Ukraine.”
Year-to-date, XAU/USD was up over 6% at the time of writing, while BTC/USD traded down 23%.
“It’s actually great to see that Gold is doing really well in these times of heavy uncertainties, crawling upwards, while risk-on assets like stocks and Bitcoin are having a hard time,” Cointelegraph contributor Michaël van de Poppe nonetheless countered.
Zschaepitz added that investments into gold-backed exchange-traded funds, or ETFs, had been increasing throughout February.
Bearish cross looms for on-chain metric
Russia thus took center stage for BTC traders, who on Monday watched gloomily as storm clouds gathered over Asian markets.
A tech stock rout on the back of a fresh regulatory crackdown from China had sparked two days of considerable downside for some of the biggest equity bets, including Tencent.
“$39.6k is now the new key resistance the Bitcoin bulls must get back above,” popular analyst Matthew Hyland said Tuesday.
He added that moving average convergence/divergence on the three-day chart was now primed to print a bearish crossover, in direct contrast to previous hopes that a bullish breakout could precede fresh BTC price strength.
Sentiment also took a hit from the latest events, with the Crypto Fear & Greed Index down to 20/100 — well within the “extreme fear” bracket.