Bitcoin Is Not “Digital Gold” – Yet

There’s always plenty of talk about Bitcoin replacing gold as a safe-haven asset, but the recent market activity shows that Bitcoin and other cryptocurrencies remain far away from this goal.

Bitcoin Suffered As Traders Rushed Into Safe-Haven Assets

Yesterday, stocks found themselves under strong pressure on worries about the situation in Ukraine. The risk-off move was very strong, and S&P 500 was down by more than 2%.

Meanwhile, gold continued to move higher and made an attempt to settle above the psychologically important $1900 level as traders increased their purchases of safe-haven assets. Treasury yields moved lower as traders rushed to the safety of U.S. government bonds despite worries about high inflation.

At the same time, cryptocurrencies were under strong pressure, and Bitcoin traded close to the $40,000 level. The crypto weakness was broad-based, and all leading cryptos including ETH, BNB, XRP, ADA, SOL, LUNA were moving lower.

Traders Should Not Count on Bitcoin To Get Safe-Haven Status Anytime Soon, but It’s Not Bearish

The recent trading action has once again proved that Bitcoin is treated as a risky asset by investors. Yesterday’s trading was a major test for various assets as fears about a potential war highlight the assets that are considered to be safe havens.

However, the safe-haven status is not necessarily bullish in the long term. If fears about the situation in the Ukraine decrease and the market becomes less worried about future Fed hikes, demand for riskier assets will increase, which will be bearish for gold and bullish for cryptocurrencies.

At this point, it looks that crypto traders should keep an eye on the trading dynamics of tech stocks which shows the current appetite for risk in the tech space. When Nasdaq will start to rebound, the crypto market will have a good chance to develop sustainable upside momentum. In addition to Nasdaq, traders should also keep an eye on the total crypto market cap, as a move above the $2 trillion level will signal that bullish sentiment is increasing.