Unlike other digital currencies, Bitcoin’s mainstream acceptance is unmatched, such that top fiat currencies are linked to it in more than one way.
While the adoption of Bitcoin in mainstream finance is a welcome development and a sure sign of the utility of cryptocurrencies, the negative side of this is that it has made Bitcoin follow the same pattern of fluctuation as the stock markets.
Additionally, the growth of Bitcoin and the S & P 500 has gone hand in hand for some time now, and their growing utility has been renewed. Still, following the global economy’s taking an unprecedented market correction for a couple of days, both have seen their values plummet.
Experts point to another angle of the correlation between Bitcoin and the US stock markets as Bitcoin reached a new high early this week, despite both losing values due to the ongoing hostilities between Russia and Ukraine.
Since the middle of last year, the correlation between Bitcoin and the IS stocks has increased, with brokers managing lots of portfolios involving investors’ assets in Bitcoin and the stock market also making provision for investing in Bitcoin exchanges.
Both markets have had the experience of what macroeconomic forces are and how market movements impact the overall price stability of stocks and BTC together.
Moreover, the United States Federal Reserve released a statement on the rising inflation rate and its decision to hike interest rates on stocks and other transactions involving cryptocurrencies, especially Bitcoin.
Bitcoin has had more utility functions in many quarters than all other cryptocurrencies combined.
Bitcoin Versus Gold
The military offensive against Ukraine carried out by Russia on the 24th of February has sent chilling waves throughout the financial markets, with the crypto market taking a hit but managing to recover slightly from the initial scare.
Analysts were adamant that this was the perfect time for Russia to consolidate its grip on the supply and circulation of Bitcoin in the event of international financial sanctions because Bitcoin, as a decentralized digital currency, is not subjected to any potential financial restrictions from other countries.
But it appears that gold is now the obvious winner in this crisis as Bitcoin has failed to get a grip on the financial situation on the ground in Eastern Europe. Investors are now rumored to be hedging their assets in gold, making the earlier held belief that Bitcoin is a better alternative to gold in value look silly.
According to Santiment, the situation in Eastern Europe points to the fact that Bitcoin has yet to prove its viability as a store of value over gold from a global perspective.
Santiment also added that despite the setback, a report of Bitcoin’s correlation with the S & P 500 shows that the institutional acceptance of cryptocurrency has grown in leaps and bounds as stock investors pour more into the crypto market.
However, investors moving their funds to gold indicates the long road that Bitcoin must take to arrive at its destination.