The curious case of Bitcoin and safe-havens

When Russia invaded Ukraine, it was a moment for bitcoin to shine, at least for crypto enthusiasts, who have long called it a safe-haven asset; it didn’t.

The world’s largest cryptocurrency by market cap rose more than 20 per cent in the first week of the war to $44,800, but plunged shortly after, reversing almost all the gains of the previous week.

Bitcoin’s promoters, also known as maximalists, always touted it to be a digital gold or a hedge against inflation, geopolitical risks and economic uncertainty. So, when Russia started the war, the biggest conflict in Europe since World War II, the digital asset had all the boxes checked for another rally: US inflation topped a 40-year high, a cost of living crisis gripped much of the world, and experts issued warnings about another recession.

Save for the initial spike, none of these risks could trigger another rally, questioning bitcoin’s status as a safe-haven asset.