Gold's slump provides hope for a cryptocurrency revival

Chris Beauchamp IG

Cryptocurrencies discover haven status as stocks sell off

Bitcoin, ether and other cryptocurrencies have trounced stocks since the war began almost a month ago. Bitcoin is up 5%, while ether has gained 4% compared to a 4.8% drop for the S&P 500. But then of course cryptocurrencies have already endured their own selloff over the last six months, while that for the S&P 500 may be just getting started. Crypto’s relative strength also comes as gold and silver slump – having stolen bitcoin’s thunder with their huge rise, the demise in both gold and silver has diminished the appeal of both and boosted flows into bitcoin.

What we’re watching – Further escalation expected

The continued rise in oil and gas prices continues to be the engine of moves across financial markets. As we have argued before, there is little immediate read across to bitcoin and other cryptocurrencies from movements in energy markets, while much of the speculative froth had already disappeared from bitcoin and its peers. There is still plenty of that in stocks and precious metals however, and a revival of flows into cryptocurrencies continues to provide support for the asset. We are still weeks away from inflation data that will show how the war is impacting prices, but while resurgent inflation is likely to hit gold hard, it could provide bitcoin with some renewed momentum.

Author

Chris Beauchamp

Chris Beauchamp has been with IG for four years, and in that time has become a regular commentator and analyst for the financial press and TV, with appearances on all the major financial channels as well as the BBC and Sky News.

GBP/USD stays offered near 1.3370

GBP/USD remains on the back foot, slipping back toward the 1.3370 zone on Tuesday. Cable has come under pressure soon after testing the 1.3400 neighbourhood as investors turned more cautious in response to renewed effervescence on the geopolitical front.

EUR/USD stays offered below 1.1450

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