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Bitcoin and gold are the leading indicators of how their respective markets handle a crisis. Currently, these two assets are feeling the full effect of the Russia-Ukraine conflict, which has severely impacted financial markets worldwide. However, their performances have been quite the opposite so far.
As the stocks markets came crashing down, Bitcoin and gold battled to become the better inflation hedge. Since the armed conflict is far from over, we cannot establish a winner. However, we can use the data we have so far to better understand each asset’s odds.
Russian Invasion of Ukraine Spurs Gold Surge
Russia invaded Ukraine on a cold Thursday morning on February 24th. As the world woke up to this bleak reality, worldwide financial markets felt the most brutal blow in recent years. For instance, only the Russian stock market dropped by 40% in a single day.
Far from the actual battlefield in Eastern Europe, the financial charts were hosting a war of their own. The contestants were gold and Bitcoin, or what some call “digital gold.” The stakes were high from the start, and the winner would win the best inflation hedge asset title.
Since its rise to global popularity in the mid-2010s, Bitcoin has outperformed gold almost non-stop. The cryptocurrency represented innovation, “new money,” and the promise of a cashless future. On the other hand, many investors saw gold as nothing more than a flashy symbol of past opulence. However, all of that was about to change.
As news of the Russian aggression of Ukraine broke out, Bitcoin started dipping. The king cryptocurrency lost more than $5,000 in only a few hours. Furthermore, it dragged the entire crypto market down the slope as most assets started trading in the red.
Meanwhile, gold took this opportunity to remind investors why it was the most sought after-asset for 5,000 years. The precious metal’s price quickly rose on the charts from $1,892 to $1,970 per ounce. So, the first day of the Russia-Ukraine conflict did not provide a winner. However, gold easily came out on top in the battle of the assets.
Bitcoin Makes a Quick Recovery
Crypto investors did not waste too much time crying over spilled milk. On the contrary, they bought the dip to help the most popular crypto in the world recover rapidly. In the next 24 hours, BTC regained almost $2,000 of its losses.
Furthermore, Bitcoin spiked far beyond the $40,000 resistance level in the next six days. News from the real battlefront of Ukraine accepting crypto adoptions helped the entire market recover. And, Bitcoin took to new heights, outperforming gold yet again.
At the time of writing, Bitcoin was trading at around $42,000. Meanwhile, gold was selling for nearly $1,937 per ounce.
As the Russia-Ukraine conflict rages on, the battle between Bitcoin and gold will continue on similar terms. Furthermore, news and rumors from the battlefield are likely to influence their trading trajectories. It is difficult to establish a clear winner of this battle now. However, the best inflation hedge out of the two should become visible to everyone in the long term.