Bitcoin rises to a new record as investors absorb increasing Ukraine-Russia tensions

Bitcoin moved higher Tuesday even amid rising geopolitical tensions between Ukraine and Russia.

The price of the flagship cryptocurrency was last higher by more than 2% at $93,803.51, according to Coin Metrics, topping its previous intraday record of $93,469.08, reached last week. Shares of MicroStrategy, which trade as a bitcoin proxy, rose nearly 10%.

The move follows overnight to reports that Russian President Vladimir Putin warned the U.S. that the threshold for the use of nuclear weapons had come down in response to President Joe Biden allowing Ukraine to use U.S. missiles to strike military targets inside Russia. Initially, bitcoin moved higher while stocks sold off. In afternoon trading, however, bitcoin advanced further as the S&P 500 and Nasdaq Composite erased losses.

Bitcoin has benefited from recent enthusiasm for cryptocurrencies after the U.S. presidential election — it’s currently up 33% for the month. Like gold, crypto assets are also seen by many investors as a “non-confiscatable,” long-term hedge against geopolitical uncertainty.

“The most significant long-term correlations for bitcoin are a negative correlation with the U.S. dollar and a positive correlation with money supply growth,” Matt Sigel, head of digital assets research at VanEck, said Oct. 28 on CNBC’s “Squawk Box.”

“Bitcoin is a chameleon,” Sigel added. “Its correlations change over time; it’s hard to predict what it’s going to be correlated with over the short term.”

Bitcoin has behaved as a safe haven before. It outperformed during the crisis in the regional banking system in early 2023, for example. But because bitcoin is also a risky asset without a long history, with extreme volatility that can benefit short-term traders, some have a hard time arguing that bitcoin is necessarily attractive forever. Citigroup, for example, in a note Monday reiterated the bank’s view that bitcoin doesn’t exhibit store-of-value properties.

“Gold peaked by October-end, nearly a week prior to Election Day,” Citi’s Alex Saunders wrote. “And with risk-on (and idiosyncratic) sentiment supporting crypto, and FX/rates headwinds building for gold, the two are unlikely to be strongly correlated in the near-term.”