Bitcoin isn’t Safe with Tension Ramping Up In Ukraine, Crypto Unit Launch by FBI
Bitcoin rose in tandem with gold for a brief moment in mid-2020, prompting crypto bulls to say that, like gold, this was a threat off asset – a hedge for economic turmoil, inflation, as well as geopolitical unrest.
Ever since, it’s resembled a risk-on asset, one that increases in value whenever investors are optimistic and drops in value whenever they are pessimistic.
That dynamic was on display on Thursday, when bitcoin plunged more than 7% after US President Joe Biden warned that Russia may invade Ukraine in days and pro-Moscow separatists within Ukraine’s east increased shelling.
Gold, the ultimate refuge asset, rose 1% to $1,902 each ounce, an 8-month high, whilst S& P 500, a classic risk-on asset, fell over 2%.
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Bitcoin’s behaviour can be explained in part by its growing exposure to institutional investors, which is treating it as if it were another technological stock. Since hitting a high in November 2021, the tech-heavy Nasdaq Composite index has dropped over 15%.
“Bitcoin/crypto is acting more like high growth tech assets,” told a crypto economist at Jarvis Labs named Ben Lilly. “Just like Nasdaq is filled with Web 2, it’s almost as if the Web 3 narrative has pegged crypto to act similar to the Nasdaq in less certain environments.”
Bitcoin’s behaviour may alter in the future. One of the grounds it’s been equated to gold is its limited supply — there shall ever be 21 million bitcoins – as opposed to fiat currencies like the dollar, which may be issued externally.
In other news, the US Justice Department declared that Eun Young Choi, a prosecutor who oversaw the case against a Russian hacker who assisted in the theft of information from over 80 million JPMorgan & Chase Co customers, should head the department’s cryptocurrency enforcement unit.
Following a series of high-profile hacks last year on the biggest US gasoline pipeline network as well as the nation’s biggest beef supplier, US officials under President Joe Biden have increased their monitoring of the crypto industry.
The FBI has already been able to locate & retrieve some of the ransom money in several of these incidents.