Bitcoin (BTC-USD) is starting to make a comeback as a major cryptocurrency, despite all the turbulence in the market. As of late Feb. 22, BTC crypto was at $38,069, up 3.2% for the day.
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This was after Bitcoin hit a low of $36,675 as of Feb. 21, when fears and concerns about the Russian invasion of Ukraine pressed on all major markets. For example, stocks, bonds, currencies and other assets fell in unison.
Some of these assets are still falling, but Bitcoin and some other major cryptos are now starting to make a comeback. Only oil and gas prices are rising and seem to be non-correlated to the general market downturn.
One reason could be that so far, Russia has not proceeded to try and overtake the Ukrainian capital city, Kyiv. This is despite the fact that on Feb. 21 its military forces pushed into eastern Ukraine.
Maybe the hope is that the fear of sanctions could forestall an all-out war in Ukraine. Bitcoin seems to be rising on the hope that an all-out hot war may not break out, even though there is now a clear cold war.
Where Things Stand With Bitcoin Going Forward
The prospect of a major war in Ukraine is still very high. This possibility could cause an elevated sense of fear, uncertainty and doubt (FUD) throughout all markets for the next several months.
The truth is that there is a real possibility of a severe market crash, especially with a hot war in Ukraine. The price of oil will skyrocket, causing fears of recession and economic slowdown throughout the world.
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Some believe that “90% of cryptocurrencies” will not be able to survive the next market crash. However, those that are left, which likely will include Bitcoin, will be stronger and dominate the market even more.
However, to be fair, other analysts now believe that Bitcoin is ensconced in a sustained bear market, according to Decrypt. One reason is falling activity on the Bitcoin platform.
Forces Lined Up Against Bitcoin
As a result, these analysts believe that BTC crypto might not rise anytime soon. For example, the prospect that the Federal Reserve will start hiking rates soon will make other interest-bearing assets very attractive.
That could make Bitcoin seem less attractive as it does not provide any formal interest income to anyone.
However, it is a store of value. Gold is seen as a stalwart asset in the face of rising inflation. Likewise, digital currencies like Bitcoin could also be a way for investors to preserve asset values over an extended bear market.
And investors should really be looking at the possibility of a bear market now. It seems that the clouds of war, Russia, inflation, rate hikes, controversy in Canada, rising energy prices and issues with China are lining up to slow down global economic growth.
Where This Leaves Investors in BTC Crypto
Investors in BTC crypto should carefully consider where they think Bitcoin will end up over the next several months. Will it continue to drift down?
Or is the recent bounce in BTC crypto a sign that investors see it as a store of value in times of severe FUD? After all, Bitcoin has survived some major crises over the past 10 years to 12 years.
One thing I have learned to do in times of uncertainty is to average down into assets that I want to own in the long run. As a result, this might be a good time to buy more Bitcoin, simply on that principle alone.
In addition, for investors who are just getting started in digital currencies, BTC crypto is at an attractive entry point. Sometimes one has to follow this principle as well — buying long-term assets when there is a high degree of uncertainty. This applies to buying Bitcoin right now.
On the date of publication, Mark R. Hake did not hold any position (either directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Mark Hake writes about personal finance on mrhake.medium.com and Newsbreak.com and runs the Total Yield Value Guide which you can review here.
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