Bitcoin isn’t shining as brightly as gold, but it’s close to setting a new record

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Gold is suddenly the focus of all attention. As Russia-Ukraine war escalates, the price of gold is nearing $2,000 an ounce.

It is now that crypto investors are wondering what this could mean for bitcoin. Analysts have long referred to bitcoin (BTC) as the biggest cryptocurrency in terms of market value, and as a possible rival to gold because of its perceived safety.

Answer: Bitcoin is still seen as a technological innovation, whose performance is still questionable as a global macroeconomic investment.

“The uncertainty levels are off the scale at the moment,” said Jason Deane, an analyst and adviser at Quantum Economics. “The default setting is, ‘Go with what you know,’ which in this case means gold.”

The gold price has risen by 8% over the past week, while bitcoin barely moved during Russia’s invasion in Ukraine. This escalated into a full-scale conflict.

Crude oil prices shot past $120 a barrel when U.S. President Joe Biden announced plans to join the U.K. in banning Russian imports of fossil fuels. Prices of petrol are rising along with prices for commodities like wheat and palladium. Stocks have risen tumbled as risks mounted to the global economy.

“Everyone has been just jumping on the gold trade,” said Edward Moya, senior market analyst with Oanda. “Bitcoin’s sitting this rally out.”

“It is behaving more like a risk asset and it is starting to follow the moves of equities more than these high-flying commodities,” Moya said.

The gold buff Peter Schiff, a well-chronicled bitcoin skeptic, couldn’t resist chiming in on Tuesday:

Lucas Outumuro, head of research at IntoTheBlock, told CoinDesk: “It seems like investors are treating bitcoin and gold very differently, with their correlation dropping to the lowest in over six months.”

“Bitcoin is still being priced as a risk asset and not yet as the safe haven many once thought it would be,” Outumuro added.

Analysts believe that bitcoin could eventually be accepted as a safe-haven and its current relationship with the stock markets will prove temporary.

“Bitcoin is still a nascent asset technology, and it’s going down because of that,” said Mike McGlone, senior commodity strategist for Bloomberg Intelligence. “But it’s in transition from a risk-on asset to a risk-off asset. That’s what I see happening.”

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