Key Takeaways:
- Bitcoin price plunged 8% against the surging Gold value.
- Gold price spike came in the wake of the Ukraine crisis escalation.
- The correlation between Bitcoin and risk-on assets has peaked.
- Inflows into the crypto market continue.
YEREVAN (CoinChapter.com) – Bitcoin (BTC) faced risks of a broader crypto market meltdown against the surging Gold price after Russia ordered troops to invade Ukraine. The flagship cryptocurrency shaved over 8% off its value in the previous 24 hours, dropping below the psychological level of $35,000.
Ukraine invasion behind the market decline
As Bitcoin declined for the previous week and other risk-on markets, gold rallied to its year-over-year high. As mentioned, the surge came amid the bubbling Russia/Ukraine crisis, triggering a spike in safe-haven assets.
In short, safe-haven assets tend to thrive in times of economic turbulence, as investors seek to allocate their assets from the mainstream economy. However, if Bitcoin was considered such during the Pandemic in 2021, the alpha crypto met the current geopolitical crisis as a risk asset, leaving gold as the primary safe haven.
Hence, the yellow metal value exploded to $1,950 for an ounce in the Asian-Pacific session on Feb. 24 before setting near $1,940 hours later.
Moreover, Fawad Razaqzada, a market analyst at ThinkMarkets, agreed with the assessment, citing “geopolitical risks.”
Precious metals continue to shine amid heightened geopolitical risks concerning Ukraine, a struggling global stock market, and soaring inflation.
commented the expert.
Bitcoin and risk assets
Meanwhile, the BTC/USD exchange rate struggled below $34,900 on Feb. 24. Additionally, the stock market plunged in unison with the alpha crypto, confirming the latter’s ongoing risk asset correlation.
The correlation reached an all-time high on Feb. 23, according to the analytical platform CryptoQuant, and its chief executive Ki-Young Ju.
Despite the plummeting price, the CEO called the correlation “good news,” as it signified growing adoption and new market participants, who “trade stocks” as well.
Also read: BTC struggles below 38K, as gold rally amid Ukraine tension jeopardizes Bitcoin's safe-haven status.
Additionally, the alpha crypto saw fund inflows for the previous five weeks instead of December’s outflows. According to CoinShares’ weekly report from Feb. 18, some $109 million poured into the crypto market the previous week, and Bitcoin’s share stood at $88.5 million.
Also read: Bitcoin, stocks, ruble: Putin’s invasion of Ukraine hurt all at once.
The full-blown military invasion of Ukraine seemed to influence the markets, as an escalation could destabilize the economy further, feeding the overflowing inflation. But, on the other hand, a release in the tension would benefit the risk assets and, by extension, the crypto market as well.
