Last week, as stock markets plunged in reaction to Russia invading Ukraine, Bitcoin fell to around $34,600. It recovered to $39,400 by the end of the week. Gold fared far better. Barrick Gold (GOLD), for example, rallied from the $19 support to over $23.
At peak fear, markets are parking their money in gold instead of bitcoin. Markets are habitually turning to metals instead of Bitcoin as a hedge against the market. With market volatility continuing, Bitcoin risks testing the $30,000 next. Bitcoin investors may hold leveraged positions in stock markets, especially technology. When they get a margin call, they need to sell their Bitcoin position. This stock/cryptocurrency cycle could repeat in the next few weeks.
Markets may stop looking at any cryptocurrency as an alternative to the U.S. dollar. Crypto investors will need to watch the correlation between the U.S. dollar and Bitcoin prices. For example, watch for the U.S. dollar to weaken and Bitcoin to do so, too. Bitcoin could fall to the $30,000 level. Before this happens, consider investing in gold, silver, and other precious metals.
The weak stock markets will eventually settle. The Federal Reserve will raise interest rates. This removes market uncertainty and may result in a big stock market rally. Bitcoin and other cryptocurrencies will rise as a result.
