Crypto vs gold: Bitcoin losing out to gold has analysts eyeing $30k level

Bitcoin dropped to a more than two-week low as fears of a possible Russian invasion of Ukraine prompted some analysts to predict the largest cryptocurrency could slide toward the key $30,000 level.

Bitcoin dropped for a sixth straight day, touching a low of $36,372 on Tuesday after Russian President Vladimir Putin said he’s recognizing two self-proclaimed separatist republics in eastern Ukraine and ordering troops there. Other cryptocurrencies also declined, with Ether off as much as 2.9% and XRP down as much as 6.7%.

Bitcoin dipped below $40,000 level over the weekend and kept weakening as the Ukraine crisis deepened, undermining the argument that cryptocurrencies are a haven in times of geopolitical turmoil. At the same time, gold has reached its highest level since June.

“In the globe’s latest maelstrom — U.S./Russia/Ukraine — Bitcoin, the asset purported to be the answer to every question, has quietly weakened and is notably underperforming its arch-enemy, gold,” said John Roque of 22V Research in a note on Monday.

Roque predicted Bitcoin may fall below $30,000 — a level it hasn’t seen since July — as traders increasingly favor gold, potentially pushing bullion to an all-time high.

“Bitcoin’s inability to hold $40,000 amid heightened Ukraine tensions means $30,000 is back in play,” Nexo co-founder and managing partner Antoni Trenchev said in an email. “Geopolitics has, for now, replaced inflation as the primary driver of both traditional and crypto markets.”

Trenchev sees last summer’s lows of around $29,000 as a “last line in the sand” but expects Bitcoin to hold at $30,000, with significant buying interest at that level.

Katie Stockton, founder of Fairlead Strategies, said technical analysis isn’t in Bitcoin’s favor either. The token, which is already trading below a long-term support level of around $37,400, would face its next key technical test at $27,200, she said.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor