Bitcoin (CRYPTO:BTC) prices are on the move again after a volatile two months to start 2022. From February 28 to March 1, the price of Bitcoin went from US$37,795 to US$43,770 — an increase of roughly 16%.

This comes as U.S. equities took a sharp turn downturn on March 1, with the S&P 500 index down 1.77%, dragged by losses in the financial sector, and the tech heavy NASDAQ 100 index down 1.65%.

The 10-year treasury yield sank by over 7.99%, with the price of +20-year treasuries increasing by over 1.25% on March 1. This was largely due to flight to quality, as investors wrangled with the latest uncertainty from the Russian invasion of Ukraine and global sanctions imposed.

Is Bitcoin decoupling?

One thing we saw during January and February was the increasing correlation of Bitcoin to U.S. equities. As tech stocks sold-off en masse during those months, Bitcoin plunged as well, as investors took a risk-off approach in the face of high inflation and impeding interest rate hikes.

That seems to have reversed recently, though. The short-term correlation of Bitcoin to U.S. equities and other risk assets appears to have changed. The mechanics behind why this is occurring is likely attributable to the global sanctions aimed at isolating Russia financially, including cutting them off from the SWIFT banking system.

It seems that with this uncertainty and market volatility, Bitcoin is again being seen by investors as a hedge against volatility in the regular monetary system. With the threat of upcoming aggressive rate hikes quelled for the time being as a result of the conflict and market turmoil, Bitcoin may have some utility as a store of value again.

Is Russia using Bitcoin?

The slew of economic sanctions levied against Russia have tanked the value of its currency, the rouble, which lost over 30% of its value over the last week. There is evidence to suggest that Russia might be using Bitcoin as an alternative asset as their currency is devalued.

Being decentralized, Bitcoin’s price cannot be controlled by external governments using sanctions. While cutting Russia off from SWIFT devastated its currency, the price of Bitcoin has actually increased. In fact, over the last day, Bitcoin broke above its 50-day SMA, signaling potential bullish movement ahead.

The ability of the Russian government and its citizenry to directly control and hold Bitcoin as opposed to relying on banking intermediaries gives it legitimacy during times of conflict. The fact that Bitcoin is not pegged to the rouble allows for it to act as a store of value during the current crisis.

The Foolish takeaway

Despite its volatility, Bitcoin has proven time and time again it is here to stay. Although many other cryptocurrencies with cheaper and faster transactions have been developed, Bitcoin still reigns as the digital gold to flock to when economic and geopolitical turmoil rocks the market.

Bitcoin’s latest outperformance versus equities dispels the narrative that it is simply another risk asset. While it may not be a hedge against inflation and rate hikes, it has done an admirable job holding up against geopolitical unrest, one of the most damaging and unpredictable black swans out there that could affect investors.

The post Why Bitcoin Soared Over 15% This Week appeared first on The Motley Fool Canada.

More reading

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• 3 Proof-of-Stake Cryptocurrencies You Should Buy in March
• Is Cryptocurrency Staking Better Than Investing in Dividend Stocks?
• Could Bitcoin Hit All-Time Highs Again in 2022?

Fool contributor Tony Dong has no position in any of the stocks mentioned. The Motley Fool owns and recommends Bitcoin.