Bitcoin Is Stronger Than Oil Right Now
As we all remember, oil experienced a serious drop last Monday. An expiring futures contract went negative and brought oil prices down below zero for the first time in the industry’s history. This was made even more drastic in the sense that many traders appear to have virtually lost interest in oil following the rise of the coronavirus pandemic. After all, nobody can drive anywhere; they’re all stuck at home abiding by self-quarantine rules.
If no one can go anywhere, no one’s going to drive or have much use for oil, meaning it’s been a relatively low-end asset to invest in these past two months. Initially, oil was trading for over $34 in early March, but has since dropped by about 50 percent to $17 per barrel at the time of writing.
So, while bitcoin has indeed incurred a few ups and downs over the past several weeks, this has been nothing compared to the wild ride of oil and other similar assets. Bitcoin, it’s true, was trading for well over $10,000 in mid-February, and while it did eventually drop into the high $3,000 range, this was only temporary. The currency ultimately settled in the high $6,000 range before eventually spiking beyond $7,600, as it did yesterday morning.
Thus, bitcoin is looking rather good by comparison.
Crypto Compare – a firm that analyzes digital assets – claims that bitcoin has far outweighed oil throughout much of 2020. In a recent statement, an analyst at the firm – James Li – explained:
The more volatile, the bigger the percentage move, the riskier the asset (regardless of the direction). As the year progressed, the disagreement between OPEC and Russia, coupled with negative demand shock caused the oil price to collapse, making it riskier than bitcoin… Under these circumstances, we may see a shift to assets that cannot be perpetually diluted instead of papering over the cracks. For the moment, cash is the only port in the storm, but that may prove to be a false hope in the mid to long term.
It’s Found Some Stability
What’s worse – oil is still rather vulnerable. Bitcoin appears to have found some stability in its current price, while oil still has a long way to go if it’s going to regain its March and April losses. Daniel Masters – chairman of the U.K.-based digital currency firm Coin Shares – explained:
Without any significant catalysts for demand, there’s nowhere to put oil. The worst isn’t over yet. The May contract just got rolled into June this week, and when June contracts expire, it will be absolute carnage.
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Source: Live Bitcoin News