Bitcoin and gold now have one of the fiercest rivalries ever recorded in the financial markets. These two assets, one physical and the other virtual, have provided an avenue for investors to earn and protect their wealth. However, with the advent of bitcoin technology, it has become a fight for which one is not only the better investment option but the better hedge against inflation.
Investors have naturally pitched their camps on the side they believe has the most potential. Others see the two assets as necessary for the future. For Bitstamp USA CEO Bobby Zagotta, he sees the cryptocurrency catching up with its physical counterpart in terms of trading.
How Bitcoin Could Trade
Even though there has been a decline in the volume of bitcoin trades carried out during the current climate, Zagotta explains how the exchange has seen the risk appetite of traders change. Talking to CNBC, the CEO notes that crypto investors were beginning to take fewer risks. Mostly this is attributed to the current global crisis that has affected the financial markets, and as a result, there has been a rise in the volume of stable coins being held by investors.
Crypto investors usually fall back to stablecoins in times of great uncertainty when they try to combat the fluctuations of the market. This has been heightened given the recent Russia-Ukraine war going on and the financial markets have taken a hit. Cryptocurrencies were not left out of this with a crash on the day Russia had invaded the smaller country, forcing investors to be more risk-averse.
BTC trading above $39K | Source: BTCUSD on TradingView.com
Pointing to the volume of the exchange, the CEO notes that more investors are leaning towards stablecoins in these times. As for bitcoin, Zagotta explained that with more mainstream adoption, bitcoin could see itself playing the same role as gold going forward. Meaning that the digital asset would begin trading like its physical counterpart. But for this to happen, there would need to be more regulatory clarity, the CEO added.
BTC On A Recovery Trend
Bitcoin and the rest of the market have suffered dips in recent times. Most notable of these have been the market crash that happened in December of last year, leaving the market extremely vulnerable. Even though most digital assets have posted recoveries from this crash, its effects are still being felt across the market.
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Bitcoin itself has mounted various recoveries following this. It has broken above the $40,000 resistance point four times this year alone. Despite not being able to hold this point, it speaks volumes to the incredible resilience of the digital asset and the bulls that back it.
As for the cryptocurrency’s reaction to the ongoing conflict, it has since stabilized since first taking a hit after news of the invasion happened. More investors are still turning to crypto to serve as a store of value, while others, like Russian citizens, find themselves unable to utilize these digital assets during these times due to bans and sanctions.
Featured image from Capital.com, chart from TradingView.com