The Bitcoin price today seems to be hugely affected by the recent bloodbath in the oil markets, where the WTI Crude Oil Futures imploded and dropped below $0 for the first time in history. As we reported earlier, the May 2020 Futures contract for West Texas Intermediate (WTI) Crude dropped by more than 100% yesterday (Monday, April 20) and at its worst, the price reached negative $37.63 which was a phenomenon that never occurred before.
Even though uncorrelated, the Bitcoin price today seems to be affected by these drops. The June WTI contract with a May 19 expiry day also dropped nearly 20% to $20.43 per barrel and the Barclays IPATH ETN (OIL) fell to $3.50.
Well, 2020 really is one for the record books. Never thought I'd see oil trade $2.5… I wonder if June WTI will suffer the similar fate too? Incredible, incredible times… meanwhile, everything else in the world is roughly unchanged. Bizarro is the new norm.
— Raoul Pal (@RaoulGMI) April 20, 2020
Less than a month ago, OPEC and Russia ended their oil war by agreeing to cut the production by 9.7 million barrels per day on May. However, at this point where there is no demand for oil, any confidence for this deal likely evaporated.
The Bitcoin price today seems weak below $6,900 and no one knows if a retracement is possible at this point. The precipitous drop was followed by other drops in the crypto news, showing that the global economy now remains in fragile shape despite the strong rebound that was seen in the Dow and S&P 500 in the last 3 weeks.
A Big Mac costs more than a barrel of oil. Now I have seen everything. pic.twitter.com/BbDnHqaEn1
— Cointelegraph Markets (@CointelegraphMT) April 20, 2020
What is also notable is that the price collapse in oil futures also highlights the impact the coronavirus pandemic has had on the global demand for oil. Literally everyone relies on oil, from the airline industry to shipping and construction projects – which have all essentially come to a standstill.
The Bitcoin news today show that BTC is largely affected by this situation. From an optimistic standpoint, we can see that BTC managed to retrace and cover some of the (7%) losses overnight and escape from the lows of $6,600. For now, this is a good indicator.
While the collapse in WTI futures is shocking and unprecedented, the June WTI contract and Brent crude remain above $20. Meanwhile, traditional markets closed in the red on Monday but the after hours trading session showed the Dow and S&P 500 futures turning positive and gaining 0.52% and 0.58%, respectively.
Bitcoin now has a way to go to regain the confidence above $7,000 and position itself as a leader once again.
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