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The price of Bitcoin has fallen under $7,000 in response to the serious crash of WTI oil futures price.
The role of Bitcoin, especially with the ongoing coronavirus pandemic, has been one to watch since the outbreak started. Many expect Bitcoin to be a serious game-changer especially as the financial markets continue to crumble. Bitcoin proponents also tout the king coin as a safe-haven asset, in times of uncertainty like the current pandemic. However, Bitcoin seems to be suffering because of the recent crash in oil.
Oil May Have Pushed Bitcoin Down
The price of oil recently crashed terribly, trading in the negative. A recent Bloomberg report showed that the price of futures contracts on the West Texas Intermediate (WTI) – the oil benchmark for North America – fell this low, for the first time. This simply happened because the coronavirus pandemic has depleted economies so much that there isn’t a lot of oil purchase. Because of this, North American oil companies basically have a little too much oil without buyers or even a storage room.
The crash in the price of oil had significant effects on the S&P 500 index and the Dow. Bitcoin is also suffering. Currently, at $6,856, Bitcoin was rejected around $7,200 recently. While it might not be directly connected, Stack co-founder Matthew Dibb has drawn an indirect connection.
“The downside in BTC is more likely attributable to losses in the equities market, which may be directly or indirectly affected by Crude prices, than the downward trend for crude directly.”
Bearish and Bullish on Bitcoin
Regardless of the current situation, many are still bullish on Bitcoin’s chances. Popular author Glen Goodman has said that because of the pandemic, the U.S. Federal Reserve is making several moves to save the economy. Goodman points to some of these moves passing as manipulation which could be detrimental. The good news here is that the crypto market is not affected and the situation could work in the market’s favor.
There’s also the halving to consider. Bitcoin halving which is less than a month away and the price is expected to spike. The halving cuts block rewards by 50%, causing more scarcity, which should swell prices. In addition, history suggests a significant spike after the halving. Voyager Digital CEO Steve Ehrlich believes the current economic situation, coupled with the halving, will be bullish for Bitcoin.
“[The Halving], combined with the overprinting of fiat currencies, directly highlights the value of Bitcoin and decentralized currencies. We believe that because of this, the halving will again catapult the price of Bitcoin over the next year.”
However, not everyone is bullish. Popular Bitcoin proponent Peter Brandt has warned that Bitcoin might actually not be living up to its “high expectations.” In a two-tweet thread, Brandt says that there is a good enough reason for anyone to be bullish on Bitcoin. Regardless, he points out that adoption rates are still poor, suggesting that cryptocurrency only accounts for a small percentage of global commerce.