By Luke Conway / March 7, 2022, 5:17 pm EST
- Oil has pushed to its highest price since 2008 as US and European allies look to ban Russian imports
- Bitcoin’s correlation with safe havens early last week was fleeting, with bitcoin dropping off some 21.4% year-to-date while gold has posted a gain of 11% in the same time
As the US and its European allies moved to ban Russian oil imports, stocks and cryptocurrencies both continued to decline.
Crude, meanwhile, jumped to its highest price since 2008 as investors priced in the lack of Russian oil. WTI Crude jumped 4.4% on the day, closing at $119.
US Secretary of State Antony Blinken said Sunday that the Biden administration is “talking to our European partners and allies to look in a coordinated way at the prospect of banning the import of Russian oil, while making sure that there is still an appropriate supply of oil on world markets.”
Gold also continued its climb amid the market uncertainty. Since Russia invaded Ukraine, gold has increased by 4.6%.
Increasing oil prices and the continued conflict in Ukraine are likely culprits for Monday’s sell-off. The S&P 500 dropped by close to 3%. The Nasdaq dipped 3.75%, and the Dow lost nearly 800 points with a 2.37% fall.
Bitcoin seems to have lost its brief correlation to gold early last week. Initially, it seemed like bitcoin’s use case as an anti-censorship tool and means for escaping the falling value of the ruble would help reform its narrative as digital gold.
Instead, bitcoin and other crypto assets have continued to fall along with equity markets, suggesting that speculation is still the main driving factor in its price swings. Bitcoin shed $600 with a 1.59% drop by the close of stock trading. Ether fell by 2.79%, losing just over $70.
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Bitcoin’s correlation to gold was short-lived, suggesting that much of its run-up during the initial phases of the Ukraine conflict were traders speculating that it would get more use. Time will tell if individuals in Russia and Ukraine begin using it as a means for wealth storage.
Investors should expect volatility leading up to the Fed’s mid-March meeting where the regulator will set interest rates.
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Editor, Evergreen Content
As Editor of Evergreen Content at Blockworks, Luke Conway oversees the creation of comprehensive educational guides on all things crypto to help users navigate the space. Before Blockworks he worked as an associate editor for Investopedia, managing broker reviews and a cryptocurrency news desk.