Bitcoin’s assumed value as a safe haven has been called into question recently as its price falls pretty much in line with other high-risk investments. Bitcoin traded down 6.7% at $35,937, according to Coinbase data Thursday morning. Since reaching a peak of more than $45,000 on February 10, the cryptocurrency has dropped about 10% of its value and even fell to below $35,000 in early trading in Asia Thursday morning.

Meanwhile, the price of gold came within $100 of its all-time high of $2,084.88 per ounce set in August of 2020. The yellow metal traded at $1,976.50 at around 6.00 a.m. ET but later dipped to around $1,925.70.

Demand for 10-year U.S. Treasury notes also has increased sharply. The yield on the 10-year note settled at 1.99% on Wednesday and traded at about 1.93%. Interest on the two-year note settled at 1.58% on Wednesday and dipped to about 1.54% in the late morning Thursday. Rates on Treasury notes decline when demand is high and increase when demand is low, just the opposite of how equities react to demand.

Traders and investors clearly liked gold and U.S. Treasuries more than they liked bitcoin Thursday. Crypto news site CoinDesk puts the issue succinctly:

Crypto pundits have long hailed the top cryptocurrency as a better inflation hedge and haven asset than gold. But price action, particularly since the influx of institutions and sophisticated players in the market after the March 2020 crash, suggests otherwise.

Oddly, perhaps, crypto believers blame traditional institutional investors for ignoring bitcoin’s theoretical value as a safe haven. The story goes that institutions like banks and financial services firms are beginning to invest in bitcoin and treating it like any other equity, not a safe haven like gold or U.S. bonds or even some ETFs.

Alex Kuptsikevich, a financial analyst at FxPro, told CoinDesk:

We see that cryptocurrencies are selling stronger than developed world stocks, confirming the risky nature of these assets and how they are not a replacement for gold.

As a whole, cryptocurrencies have dropped about $1.5 trillion in market capitalization since Russia’s invasion of Ukraine was set in motion. That represents a decline of 9% in just 24 hours.

Barron’s reported two days ago on how bitcoin was failing as a safe haven. Yuya Hasegawa, an analyst at crypto exchange BitBank, told the old-guard publication:

Bitcoin’s safe haven narrative has almost completely fallen apart as the rising possibility of military conflict and the worsening U.S.-Russia relationship puts the wider financial market in risk-aversion mode.

Because crypto prices correlate closely with those of high-risk assets like tech stocks, crypto’s value as a safe haven is essentially nil. The next test will be what happens when this crisis passes (assuming it does and everyone lives through it). Will crypto believers return to buying crypto as quickly as they abandoned it? We’ll get back to you on that.

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