Ukraine-Russia war: Cryptocurrencies have been in the news since Russia’s invasion of Ukraine. The demand for volatile cryptocurrencies such as bitcoin has been increasing in Russia and other countries. Let us take a look at how cryptocurrencies have fared in Europe during this worst conflict since the Second World War.
Bitcoin declined in the early stages after Russia’s attack on Ukraine began as investors looked to exit the riskier asset. On Thursday, bitcoin fell as much as 8 percent. However, recovery was also seen in it on the same day. During the same period, European stocks fell by 3.3 per cent while the S&P 500 index gained 1.5 per cent.
Then after that on Monday, there was a jump of 14.5 percent in bitcoin, which was the best day of the year for it. Bitcoin is currently seen trading up 12 per cent from the level before the attack began on February 24, while US stocks have seen a slight gain relative to bitcoin over the same period. The S&P 500 index has gained 3.3 per cent during this period, while the MSCI’s world index has seen a slight decline.
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Joseph Edwards of crypto firm Solrise Group says that during this entire crisis so far, cryptocurrencies seem to be in sync with the US markets to a great extent.
Is crypto a safe investment option?
Cryptocurrency-loving investors see bitcoin as digital gold. It is considered the best option to keep cash at the time of war or disaster. Crypto fans say that the supply of bitcoin is limited and it works on a global computer network. This network is out of reach of governments so that it is not in danger of being frozen. Due to which it is more secure than traditional currencies.
On the other hand, there is also an argument that things are not so easy. The safe haven character of bitcoin is not clear. It often behaves the same way as other asset classes. In other words, in a difficult situation, bitcoin behaves like equity shares and it also involves all the risks that are associated with stocks.
Investors say that the demand for bitcoin has been seen increasing during the fight, due to which it has performed even better than other safe investment options. Looking at the period since Russia started attacking Ukraine, it comes out that since last Wednesday, gold has seen an increase of 2.6% so far, while the US 10-year Treasury yield has seen a decline of 8.7 percent. has received. While bitcoin has seen an increase of 12 percent in the same period. However, many analysts still maintain that on this basis, the safe haven appeal of bitcoin is not fully upheld.
Richard Usher of BCB Group Group, a crypto firm, says that we do not believe that bitcoin is being seen as a safe haven and it should not be but despite its limited supply, its credit free, it has to be Being possible to carry digitally is making bitcoin the best alternative to traditional currency in the current environment.
He further added that if conditions continue to worsen and the market risks further increasing, then we may see the rally of bitcoin also stalling but for now it is outperforming.
Similarly, Noelle Acheson, another New York-based veteran, says the fight has reinforced the notion that bitcoin is just a speculative asset. This is because it is an asset in which the risk of seizure is relatively low. It is also not affected by the policies of the central banks of different countries.
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