Due to the crisis between Russia and Ukraine, Bitcoin and Gold have been performing well. The financial markets are being hit very hard by the ongoing conflict between Russia and Ukraine. Russia had its stock market plummet by over 45%. Other financial markets saw similar declines. This onslaught also affected Bitcoin. However, this did not stop gold from flourishing in the environment. It raises the question, which asset can be used to hedge against inflation?
Russia’s Invasion of Ukraine Sees Gold outperform
The first stages of Russia’s invasion of Ukraine began on Thursday 24 February. This horrified the entire world. These areas were bombed in different parts by Russian forces, despite the fact that Ukraine has less military might. However, investors were watching with anticipation as gold and bitcoin fought their battles elsewhere.
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Bitcoin has emerged in the last years as the “digital gold”, giving its physical counterpart a run for its money. Over the past year bitcoin outperformed bitcoin, and digital assets were embraced by investors as the best inflation hedge. As news spread about Russia’s invasion, bitcoin did not fight the Russian invasion and it began to fall very rapidly.
Gold made this use of the time to prove that it’s a viable contender as a hedge. Gold had quickly risen in the charts after its digital rival had dropped on Thursday.
Source:| Source: Twitter
On Thursday, the asset, which was trading as low at $1.892 an ounce yesterday, climbed to as high $1.970, before plummeting. Although gold was the clear winner, it would only be a temporary victory.
Bitcoin Takeover
Thursday passed and by evening, the markets had settled once more. Bitcoin, which suffered a lot on 24th of March, had reached $34,000 at the bottom before regaining its momentum.
Source: BTCUSD from TradingView.com| Source: BTCUSD on TradingView.com
There was a clear trend reversal between bitcoins and gold as Thursday came to an end. The former had performed well at the breaking of the news. However, bitcoin would be the dominant asset in the next wave.
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While gold was back at $1,888/ounce, bitcoin had recovered. Bitcoin saw an increase in its price that brought it close to $42,000. While the tangible nature of gold is a strong reason for people to believe in it, bitcoin’s ease of movement can make it a more attractive option to use as a hedge. BTC continues its recovery, while gold is continuing to slide as it draws near.
Source: Gold Price| Source: Gold Price
Featured image taken from CoinWeek. Chart by TradingView.com