Cryptocurrencies continued to pull away from stocks as the intensifying war in Ukraine prompted investors to look for safe-havens. Bitcoin jumped 18% over the past three days, while the MSCI AC World Index has fallen in nine of the past 10 sessions, Bloomberg reported.
Bitcoin proponents have for years touted its virtues as a hedge against conflict and inflation, citing its borderless nature and fixed supply.
That image was dented by a crypto rout that started in November and sent Bitcoin tumbling as much as 52% amid concerns about central bank tightening. Other so-called alt-coins suffered even steeper declines.
Bitcoin’s rebound
But the past few days of broad gains in digital tokens have kindled the notion that, at least, they offer protection from governments that can seize other types of assets, as some have recently vowed to do to Russian oligarcs.
It’s “fascinating that, after a week into geopolitical uncertainty, Bitcoin is outperforming gold, which is known as a safe-haven asset,” an analyst at UK-based digital asset broker GlobalBlock, Marcus Sotiriou, told Bloomberg.
Gold slipped 0.2% on Wednesday after rallying since late January.
As evidence mounts of a crypto rebound, retail investors appear to be piling in. Most of the accumulation in Bitcoin over the last week came from smaller investors, according to data from Glassnode.
The researcher cited significant buying increases in wallets with less than 1,000 Bitcoins – with those with less than one Bitcoin being the most aggressive.
“This geopolitical environment is certainly a tailwind for crypto,” Jonathan Cheesman, head of over-the-counter and institutional sales at crypto-derivatives exchange FTX, told Bloomberg.
“This situation highlights the use case for a decentralised, neutral, algorithmic safe haven.”
The Bloomberg Galaxy Crypto Index rose 4.5% on Tuesday, the fifth straight day of gains. Ether was up 17% to $3,004 at 5:50 p.m. in Hong Kong on Wednesday.
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