(Bloomberg) —
Bitcoin rose to more than $44,000 for the first time since the end of last week as optimism over an easing of tensions around Ukraine renewed investors’ appetite for riskier assets.
The largest cryptocurrency by market value strengthened as much as 5.2% to $44,449. Other digital tokens also increased, with Ether jumping 7%, Solana up more than 9% and DeFi favorite Aave also up around 7%.
Global equities rallied after Russia said Tuesday that some troops are starting to return to their regular bases after completing drills. U.S. warnings of a possible Russian attack on Ukraine had reached their most urgent level yet this week.
“The level of geopolitical tension that has existed over the last three weeks for right now appears to be easing, so therefore there is this sense of people jumping back in looking for bargain hunting,” Kenny Polcari, managing partner at Kace Capital Advisors, said.
James Butterfill, head of research at CoinShares, said reports that the Russian government could permit the trade of cryptocurrencies, in part to attract foreign investments, could also be pushing the token higher.
Bitcoin was swept up in the recent market anxiety over Ukraine, falling 2.7% on Friday. Proponents of digital assets often tout an uncorrelated relationship with broader markets, yet the asset class continues to mimic movements in equities, particularly technology stocks. The correlation coefficient between Nasdaq 100 futures and Bitcoin currently stands at 0.4, with 1 representing parallel moves.
“It’s correlated for now,” Butterfill said. “It’s clear that it’s quite sensitive to rising interest rates, but what happens in a situation where you have a policy mistake, i.e. the Fed hikes too aggressively, for instance, or they don’t hike aggressively enough, and there’s an inflation problem. That would actually probably be much more supportive of Bitcoin and less supportive for equities.”
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