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Bitcoin has surged to unprecedented heights as tensions between Ukraine and Russia escalate. On Tuesday, the cryptocurrency reached a peak of $94,000 for the first time, reflecting a growing investor response to geopolitical developments.
As of the latest data from Coin Metrics, Bitcoin was trading at approximately $92,616.00, marking an increase of over 1%. Earlier in the day, it had hit a high of $94,068.75. Additionally, shares of MicroStrategy, often viewed as a proxy for Bitcoin investments, saw an impressive rise of 11.9%.
The price movement coincided with alarming statements from Russian President Vladimir Putin, who indicated that the threshold for nuclear weapon use had lowered in light of President Joe Biden’s approval for Ukraine to utilise U.S. missiles against military targets in Russia.
Initially, Bitcoin’s value increased while stock markets experienced declines. However, by afternoon trading, Bitcoin continued its upward trajectory even as the S&P 500 and Nasdaq Composite recovered from earlier losses.
For the month, Bitcoin has seen a remarkable increase of 31%. This rally can be attributed to renewed trader enthusiasm for cryptocurrencies following recent elections, with expectations that President-elect Donald Trump will appoint more crypto-friendly regulators to promote industry growth. Many investors view Bitcoin similarly to gold—as a “non-confiscatable” asset that serves as a long-term hedge against geopolitical instability.
Matt Sigel, head of digital assets research at VanEck, noted that “the most significant long-term correlations for bitcoin are a negative correlation with the U.S. dollar and a positive correlation with money supply growth.”
He added that “Bitcoin is a chameleon,” putting emphasis on its shifting correlations over time and the unpredictability of its short-term relationships.
Historically, Bitcoin has acted as a safe haven during times of crisis. For instance, it outperformed during the regional banking turmoil in early 2023. However, due to its nature as a volatile asset lacking a lengthy track record, some analysts remain sceptical about its long-term appeal. Citigroup reiterated its stance in a recent note, suggesting that Bitcoin does not possess true store-of-value characteristics.
“Gold peaked by October-end, nearly a week prior to Election Day,” stated Citi’s Alex Saunders. He added that with risk-on sentiment benefiting cryptocurrencies and increasing pressures from foreign exchange and interest rates affecting gold, it is unlikely that the two assets will maintain strong correlations in the near future.