Bitcoin a haven? Staying power of Cryptocurrency's revived refuge status faces test
The sustainability of cryptocurrencies as a refuge is already facing a test after the digital alternatives to fiat were championed in the wake of Russia’s attack on Ukraine. After surging as much as 20% at the start of last week and briefly topping $45,000 on speculation that sanctions and a collapsing ruble would drive Russians into cryptocurrencies such as Bitcoin, the original digital token reverted to acting like just another risk asset by Friday. It was trading at about $38,390 as of 6:56 p.m. New York time on Sunday, close to the lowest since Feb. 28.
Bitcoin was born in the wake of the global financial crisis as an alternative currency outside the traditional monetary system. Since that time, it has been promoted as a means of exchange and a store of value that is detached from governmental control. Those use cases had become secondary as speculation become the primary use case until the war renewed the haven discussion.
“It’s a monetary asset that you can bring with you and not be subject to the banking system,” said Jeremy Schwartz, global chief investment officer at WisdomTree Investments Inc. “A lot of what’s happening in Russia I think helps illustrate for people the value of Bitcoin.”
Schwartz says that while many investors still see crypto as a speculative asset, the actions of the past week “makes you think that there’s a big part of the population that would like to have a place to store their cash and take it with them if they need it.”
The brief rally also renewed the debate around whether cryptocurrencies will be used to skirt the sanctions U.S. and NATO allies put on Russia. Even politicians voiced that concern, with Massachusetts Senator Elizabeth Warren saying crypto is “a shadow world” that Russians
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