- Bitcoin has dropped again on news that Russia has invaded Ukraine
- Gold and oil are the only markets showing strength
- Bitcoin has shown it is still not ready to be considered a safe haven
Bitcoin has joined equity markets in dropping further on the news that Russia has invaded Ukraine, with gold showing its true pedigree as a store of value in troubled times. Already looking heavy after hitting a double top at $45,000, Bitcoin has reacted negatively to news of the Russian invasion and fallen below $35,000 as traditional stock markets retested January’s lows. The price action proves that Bitcoin is still not ready to be seen as a safe haven in times of turmoil.
Bitcoin Follows Other Markets into the Red
We had already warned that Bitcoin was on a dangerous path following its rejection from $45,000, and the news that Russia has invaded Ukraine, potentially pulling other western powers in with it, has acted as the catalyst to drag it further down:
This price action is eerily similar to equity markets which are also testing last month’s lows:
There are two outliers in this scenario, gold and oil, which are both enjoying rallies as is often the case in scenarios such as this. The price action of gold, which has risen 8% this month alone, reaffirms the suggestion that we have joined others in making for some time that Bitcoin is not yet ready to be a safe haven for investors despite its similarities to gold in terms of having no political or geographical allegiances.
$30,000 Remains Crucial for Bitcoin
As for where Bitcoin goes next, the crucial $30,000 level comes back into play once again. Should Bitcoin return to that level, the first time since July last year, that would represent another lower high and lower low – a sure sign of macro weakness in the market. Returning to this level would represent a 56% drop from the highs in November last year, which is knocking on the door of bear market territory given that 40-50% drops are the typical range we experience in a Bitcoin bull market.
While 56% isn’t a huge deviation from this figure it is nevertheless significant and with the macro outlook looking poor the signs of a longer term correction are starting to stack up.