Oil with surcharge and gasoline at a loss. Why is it good for bitcoin.
Quotations of supply futures for raw materials of the WTI and Urals brands fell below $0, the price of Brent barrels started to fall too. What is the reason for this, when the situation normalizes and how will it affect the prospects of digital money.
On Monday, April 20, an extraordinary event happened in the oil market: May WTI delivery futures dropped to -$40. This means that the manufacturer will pay the buyer if he can pick up the raw materials and partially unload the storage. This situation happened yesterday with another variety, the Russian Urals. Its price fell to -$2. Brent also suffered, maybe not so much, but over the past day its rate has fallen by 9%, to $23.77.
As a result, wholesale prices for gasoline fell sharply below cost in Russia, and oil companies were forced to sell it at a loss. Now companies are losing about 2.3 thousand rubles per ton of AI-92. This situation was caused by a decrease in demand for fuel due to a drop in car traffic.
The reaction of the ruble and bitcoin
The ruble also reacted to a drop in oil prices. His quotes fell to two-week lows. In the evening of April 20, the dollar exchange rate was 75.27 rubles, the euro — 81.69 rubles, according to the Moscow Exchange. According to EXANTE Managing Partner Alexei Kirienko, a reversal in commodity prices has returned anxiety to financial markets.
“Once again, the sensitivity of the ruble and other financial instruments to the dynamics of markets is growing — all of them risk switching to risk-off mode. This means selling everything, including gold and bitcoin, as well as increasing traction in the dollar. It is likely that the ruble, which now looks abnormally strong with the current negative dynamics of oil, may at some point fall into decline», the expert suggested.
He explained that negative oil prices are associated with an extreme manifestation of its oversupply. It is likely that the Cushing oil storage facility where the supply is going is full. Those who bought oil have no opportunity to accept it. The decrease in value provoked a surge of margin calls, and many traders received losses, the specialist added.
“No one could even imagine such a picture and did not put it into their models. However, there is a positive side to bitcoin in this story: now no one can say that it is worthless, because oil, for example, is already in the red”, concluded the specialist.
Bitcoin crash risks
Yesterday, amid the turmoil in the oil market, Bitcoin fell in price. Its price again fell below $7,000. Now the first cryptocurrency costs $6917, over the past day it has lost 4% of its value. The coin has been trading at these levels in the past few weeks, and its volatility has fallen to a three-month low. This usually speaks in favor of the onset of strong fluctuations.
On Monday, analyst Omkar Godbowl predicted that the main digital coin could soon fall in price to a key support level of $6450. Another trader, Yashu Gola, also spoke about the fast strong movements on April 20. According to him, the asset risks falling to $6,500, and then to $5,000.
The opposite opinion is shared by Nikita Zuborev, senior analyst at Bestchange.ru. He believes that now the first cryptocurrency is in a range convenient for buying, and there are no serious prerequisites for a further fall: while the traditional market is experiencing turbulence, cryptocurrencies are becoming more attractive to investors.
“If we compare the trend with world indices and the price of oil, we will not see any significant matches. Moreover, if there was any dependence of the cryptocurrency market on the hydrocarbon futures market, we would see a sharp rise after the rollback of WTI oil prices this morning”, Zuborev says.
According to him, in a crisis, you can see the trend for the sale of assets, including cryptocurrencies, but this does not mean the connection of digital money with world indices.
The situation with oil will not affect Bitcoin in any way, a much more important factor today is halving, to which only three weeks remain, the analyst added.
“The halving factor may negatively affect the price of bitcoin in the next few months before the shortage in the market becomes noticeable, but this will not be directly related to the trends of the traditional market”, the specialist noted.
The relationship of bitcoin, stocks and oil
Analyst of IAC “Alpari” Vladislav Antonov agreed with Zuborev. He also believes that at the moment the situation with oil does not affect the cryptocurrency market. However, digital money shows a very strong connection with the S&P500 index — the correlation is 0.8, the expert noted.
“Falling oil prices will negatively affect the Russian economy. Brent is now trying to find a foothold after yesterday’s WTI collapse. Sellers know that they are strong, so they will aim at 1998 levels at $9.55”, the analyst suggested.
Experts believe that at the moment there is no direct connection between the fall of oil and the decline in the value of cryptocurrencies. The situation with negative prices for WTI and Urals, on the contrary, could have a positive effect on the attitude of investors towards digital money.
Even if their price drops significantly due to the crisis, as was the case in March, when BTC lost 50% of its value in two days, this will not affect the fundamental characteristics of the new type of asset. So, his future will remain promising, current prices will be profitable to buy.
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