At a time when gold prices are surging to their highest levels since June last year, digital token Bitcoin continues to trade lower amid rising tensions between Russia and Ukraine and fears of inflation.
The world’s largest and the most popular cryptocurrency fell for the sixth straight day on February 22, touching a low of $36,372 after Russian President Vladimir Putin ordered “peacekeeping” troops into two breakaway regions -- Donetsk People's Republic and the Luhansk People's Republic -- in eastern Ukraine after recognising them as independent states.
Bitcoin has plummeted by about 19 percent in 2022 (year-to-date), Mint reported. The digital currency is over 46 percent away from its record high of near $69,000 in November 2021.
As Bitcoin dropped to an over two-week low, analysts said the digital token could slide further to the key $30,000 level.
In a note on February 21, John Roque of 22V Research said Bitcoins had weakened in the midst of a global maelstrom between US, Russia and Ukraine despite its claim to be a haven in times of geopolitical turmoil, underperforming arch-rival gold, Bloomberg reported.
According to Roque, Bitcoin prices may tread below $30,000, while bullion may rise to an all-time high with traders increasingly favouring gold. The last time Bitcoin dropped below $30,000 was in July 2021.
Nexo Co-Founder and Managing Partner Antoni Trenchev echoed Roque’s belief and said the digital currency could see $29,000 as a “last line in the sand,” but hold at $30,000, with significant buying interest at that level.
Trenchev said the inability of Bitcoin to hold at $40,000 amid the Russia-Ukraine crisis “means $30,000 is back in play.”
“Geopolitics has, for now, replaced inflation as the primary driver of both traditional and crypto markets,” Trenchev said in an email to Bloomberg.
Katie Stockton, Founder of Fairlead Strategies, said the digital token, currently trading below its long-term support level of $37,400, is expected to face its next key technical test at the $27,200-level.
In January 2022, US investment company Invesco also said Bitcoin could tumble below $30,000 this year. However, it cited the bursting of the crypto bubble as a reason for the fall.
"The mass marketing of Bitcoin reminds us of the activity of stockbrokers in the run-up to the 1929 crash," Business Insider quoted Paul Jackson, Global Head of Asset Allocation at Invesco, as saying.
