Bitcoin is still trading at half price relative to recent all-time highs. But any further drop could be a signal for buyers.
The world's largest cryptocurrency has been trading below its 200-day moving average for 70 straight days, one of the longest such streaks in history, according to Jake Gordon, an analyst at Bespoke Investment Group.
Strategists and crypto investors have been debating Bitcoin's safe-haven status amid Russia's sting operation in Ukraine, which initially sent prices up on speculation that sanctions and the collapse of the ruble would lead Russians into a new asset class. Since then, prices have declined again, partly due to concerns that cryptocurrencies could become a means of circumventing these sanctions, although many analysts argue that this will be difficult to do.
Many analysts consider a potential breakout of Bitcoin above its 200-day moving average - for the first time since January - as a bullish signal. It is also currently trading below its 50 and 100-day average prices.
The coin is still about 40% below its most recent all-time high of around $69,000. Meanwhile, the S&P 500 was down about 2% on Monday amid fears that Russia's war with Ukraine could affect growth prospects around the world.
Victoria Green, founding partner and chief investment officer of G Squared Private Wealth, said: "People overestimate the role of cryptocurrencies in their portfolio because it certainly acts more like capital than a hedge against risk and inflation. Because, frankly, if it's a hedge against inflation, it should work better." She added that gold is holding up better during the recent risk movement in the markets.
Alex Picard of Research Affiliates wrote: "Note that the idea that cryptocurrencies will disrupt traditional finance is a delusion, not a certainty."
Interest in cryptocurrencies emerged in the wake of the global financial crisis as an alternative currency outside the traditional monetary system. Since then, it has been promoted as a medium of exchange and a store of value that is separate from government control. These use cases became secondary as speculation became the main use case until Russia's fighting in Ukraine revived discussion of this tool as a safe haven.