This is a key case study for investment bitcoinThe cryptocurrency market is in decline as rising inflation and geopolitical uncertainty continue to hammer it.

The bitcoin price fell to a two-week lowAfter declaring the two regions independent, Russian President Vladimir Putin sent troops to Donetsk (and Luhansk) on Tuesday.

Bitcoin’s backers refer to it as “digital gold”. It refers the notion that bitcoin could provide a store-of-value similar to gold. gold — one that’s uncorrelated with other financial markets, like stocks.

The cryptocurrency is also seen by Bitcoin investors as a “safehaven asset” that can be used to hedge against economic uncertainties and rising prices. This reduces the purchasing power for sovereign currencies such as the USD. U.S. dollar.

With inflation at historic highs, you’d expect this would be bitcoin’s time to shine — U.S. consumer prices last month rose the most since February 1982According to Labor Department statistics, the figure is.

Since November’s record-breaking high of almost $69,000, cryptocurrency has seen its value plummet nearly half. Analysts are now questioning whether the cryptocurrency’s status as “digital gold,” or if it is still a valid form of investment.

“Bitcoin is still early in its maturity curve to be firmly placed in the category of ‘digital gold,'” Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, told CNBC.

Bitcoin’s latest drop coincided with global stock market declines, which led to the S&P 500In closing Tuesday’s session correction territory. Bitcoin’s price has increasingly been tracking moves in the stock market, with correlation between bitcoin and the S&P 500 steadily rising.

Experts believe that cryptocurrencies are more closely tied to other speculative markets such as tech stocks. This is due to concerns about lofty valuations falling as the cryptocurrency market matures. Federal ReserveOther central banks increase interest rates, and reduce their massive stimulus programs.

CNBC’s Chris Dick told CNBC that the correlation between stocks and crypto has been strong over the past few months due to both the Russia-Ukraine geopolitical position and inflation-related macro news.

“This correlation shows that bitcoin is firmly behaving like a risk asset at the moment — not the safe haven it was touted to be a few years ago.”

Recently, however, gold is actually performing better than bitcoin. Spot rates on the precious metal rose as much as $1,913.89 per troy-ounce to their highest point since Monday, June 1, 2016.

“Bitcoin, the asset purported to be the answer to every question, has quietly weakened and is notably underperforming its arch enemy, gold,” John Roque, head of technical strategy at 22V Research, said in a research note Monday.

We expect Bitcoin to return to 30,000, then fall below that level. And we still believe gold will reach a new all time high.

Bitcoin’s collapse has led to more talk of a long bear market called “The Long Bear Market.”crypto winter.” “The last instance of such an event occurred during the late 2017/early 2018 period, when bitcoin dropped as much as 80 percent from its record high of nearly $20,000.

However, not all analysts believe that the recent drop in bitcoin prices indicates a crypto-winter. Many say market conditions have improved. Experts believe that bitcoin is more closely linked to stocks because there are many institutions now holding it.

Dick of B2C2 stated that bitcoin’s correlation to equities is due to investors adopting cryptocurrencies from other asset classes. But he said that the relationship can be broken due to differences between the markets’ fundamentals.

Luno’s Ayyar says that bitcoin must have a wider adoption in order to be able to rival gold for its store of value.

“The fundamentals have always made sense — limited supply currency not affiliated with any nation state,” he said.

“But bitcoin needs to undergo its due process of monetization, where it’s held by a large enough pool of participants — more retail flow, larger institutions adding bitcoin to their balance sheets, [and] potentially more nation states after El SalvadorBitcoin buying