Recently we have witnessed several historical moments. The expansion of a pandemic that has been brought to its knees to the world’s economies, and the price of a barrel of oil fall below zero. The latter is due to the decrease of the global demand for crude oil, but we must go further and analyze if this event will have an effect on the purchase of Bitcoin in the oil-exporting countries.
What caused this collapse?
We also know that the countries of the bloc OPEC+ decided, at the beginning of April, cut crude oil production to 9.7 million barrels per day from may. However, the problem of storage of crude oil is the one that has affected you in a big way, the valuation of the futures contracts of WTI. More specifically, the prices of WTI reflect the agreement of may, which ends today. The collapse is a reflection of the traders who left the contract in may and passed in June. The contract may little negotiated loses something of relevance. And the analysis say that the contract of June, which is traded at USD 20 per barrel as of Monday, now becomes the important number to keep in mind. Here was also influenced by the over-supply in the oil market, become part of the dispute between Saudi Arabia and Russia in march. The negative number in the valuation of the oil means that countries, in a few words, paid others to carry the crude. On this point we could delve into another article. The fundamental of this is that it makes us wonder if in a crisis like this, investors in exporting countries will opt for Bitcoin. Be that as it may, this has a significant effect on the economy of those countries whose income is primarily based on the export of oil.
Do you buy more Bitcoin now investors in oil-exporting countries?
It is worth noting here that several of these countries have emergency funds to try to mitigate the effect of this type of event in their economies. In the case of Iran, in January there was a boom in the purchase of Bitcoin due to the tensions it had with the united States at that time. In addition, Bitcoin is an asset normal in economies such as the venezuelan a long time ago, but by the hyperinflation that living in this country. Many may think that now in the conditions in which it is the market, the majority seek refuge in Bitcoin, but this does not seem to be the case. A priori we could say that Bitcoin has no storage considerations, such as oil, and no problems of physical delivery as the gold, and that’s why it is attractive to many. But is this necessarily a positive for BTC? In fact, the appreciation of Bitcoin has declined in a range of 5 days in countries like Saudi Arabia and Iran, according to Coinbase.
What has happened with the price of Bitcoin, in front of the oil?
Recalling that WTI means West Texas Intermediate, we recognize that in this case the most affected was the united States, or at least this is what reflected in this number. Yesterday, it closed at -37 USD per barrel. Hence, the panic that it generates to see that number flooded the market in general. At the time of writing this publication, Bitcoin has lost a 3,20% of their value compared to 24 hours ago. So, it is located in 6.846 USD. However, putting it in context, this decrease of only 3,20% seems to be stable if compared to the 13% fall of the S&P500 Index, or the same oil. Also, many might consider that Bitcoin unlike the oil has a production and a pre-determined amount, so that no geopolitical event will change this fact. Graph of the price of Bitcoin in the last 24 hours. Source: CoinDesk
At these times the depth of the recession by the pandemic continues without being able to determine with accuracy. So, many people can be considering that they prefer to invest their money in other assets like Bitcoin or gold. Some have done so to the wait of what will happen in the Halving of BTC in may. However, this decrease in the price of Bitcoin is due to the selling pressure, as many decided to opt to have cash. It is responsible to say that if in may not generate the expected effect of the Halving (doubling in price of BTC), the mining industry cryptographic could see a bump similar to what just happened in the oil industry. At this time, though look more stable than the oil, BTC looks weak. Thus, we have that even in oil-exporting countries can be a pressure to protect your money in assets with stable or safer, is not necessarily in Bitcoin. Other factors may influence, as for example the fact that the fall happened just yesterday, and that many prefer to take shelter in gold.