Oil markets are reportedly down as much as 20% in January. Meanwhile, Bitcoin has seen a serious rebound, pushing up to over $9,000 per unit. Is what’s bad for oil good for Bitcoin?
Some say it’s unwise to draw too close a line between oil and other instruments. How much does the oil market affect the stock market? Hard to tell, really, but there’s some who say it’s an obvious data point.
Some analysts look at these two markets and make an obvious connection. People may be pulling out of oil and pushing their money into Bitcoin. There’s certainly nothing stopping that, but to have a clearer picture, we’d need more markets that directly connect the two.
If you could directly trade Bitcoin against other commodities like steel and oil, that’d be an interesting market to study. Then when oil began to collapse, we could observe, or not, a clearer pattern of people exiting one and thus pumping the other.
Oil Sputters: Bitcoin Prospers?
One thing that may be helpful in determining what other asset classes crypto money is coming from will be as more and more assets get onto the blockchain. Presently, it’s possible to put valuable assets in the form of non-fungible tokens.
The same can be done with oil and other commodities. But the legacy markets that trade in those things would truly be the ones to lead the way on such a mission.
In the past, not much could affect Bitcoin markets, but later developments have meant that virtually anyone can get involved in trading Bitcoin. If people already trading what they consider to be risky assets, such as oil, it would make sense that BTC could see a pump anytime oil tumbled.
Oil is just one asset that could be considered in this manner. But looking at the numbers, it sure does make you wonder.
Over the course of January, the price of a barrel of WTI Crude coil dropped from $65 to under $52. Meanwhile, the price of Bitcoin went from about $7,200 to over $9,400.
Is it a mere coincidence? You decide.