How does oil affect Bitcoin?
We are sure that you rarely ask such questions. In fact, this is normal, since the crypto industry, in theory, does not depend on the usual market for resources and assets. Nevertheless, the well-known trader and founder of the Top Traders network noted that the oil exchange really affected the price of the first cryptocurrency. What exactly is the relationship expressed in? What to expect in the near future? Let’s get it right.
Connection reasons
If you are not only following the digital market, then you probably remember the collapse of oil in February. Price drops are due to the shutdown of airlines. It is for aircraft fuel that oil is needed to a greater extent, so airlines are actively buying up this resource. But due to coronavirus and widespread quarantine, flights were canceled. Purchased and produced oil has lost relevance, creating a shortage in the market. A similar trend continued from February to May. It was in this period of time that the market recorded the lowest oil price tags in history. It even came to a negative cost. And, as it turned out, the fall of Bitcoin is directly related to the situation with oil. For example, analysts say that the first coin moved for almost 4 months in sync with the S&P 500. Recall that this marker indicates the dynamics of stock prices of several companies. Which are considered together. One of the oldest indicators directly affects cryptocurrencies. And then we will tell you what exactly are the reasons.
Why is oil associated with bitcoin?
In fact, the relationship is rather indirect. Nowhere is it said that there is a connection between Bitcoin and other assets. This, after all, is a cryptocurrency. Not a stablecoin. However, a certain relationship is traced due to the behavior of coin owners. At the start of the pandemic, many traders realized that a crisis was imminent. The gradual sale of accumulated assets began. Enterprises and individual traders sought to accumulate more funds in order to prepare for a difficult situation. And Bitcoin, like oil, began to fall in price. Because traders started selling coins. Thus, you can build a fairly simple scheme: oil falls – the owners of the coins are nervous, get ready for the crisis and start selling coins. As a result of this, Bitcoin is falling. It is worth noting that such a simple chain works with respect to most other coins. Because ETH holders are also interested in overcoming the crisis.
These macroeconomic phenomena, it turns out, work on crypt. Previously, digital coins were considered something detached, something unattached to the general laws of the market. But, as we see, the real picture of the world is somewhat different from the ideas of Satoshi Nakomoto.
How to respond to such news?
The above are the basic laws of the market. This absolutely does not speak about Bitcoin in a bad way. The coin is still interesting to a wide audience and still remains a strong market player. Another question is the ability to prepare for possible price drops. Now it will be much easier for you to find out when the value of the crypto market collapses. Just analyze stock exchanges. If you notice that things are not going in the best way, immediately draw the appropriate conclusions until others have made them. Crypto owners often also have regular assets, and, in the pursuit of stability, can start selling coins. Think ahead and follow all the news of the crypto industry with us. We publish only high-quality and interesting material. Thank you for your attention. Good luck!
