Bitcoin Slips Below $8000 Amid Oil Price War
Affected by the coronavirus spread and the unsuccessful negotiations between oil countries, the global economy was hit again.
Bitcoin, which is regarded as “digital gold” is not spared. According to QKL123’s data, in the past 24 hours, bitcoin has fallen from a high of $8800 to a low of $7800, a dump of nearly 10%, while most of the top 10 cryptocurrencies by market value have fallen by more than 10%.
Obviously, Bitcoin price has not been spared the carnage inflicted upon crude oil markets and at the time of publishing the digital asset is plunging below $8,000 to mark a new low at $7,675.
In overnight trading last Sunday, the U.S. stock index futures fell sharply. At the same time, the Middle East stock market dumped as the global oil price slipped. Brent crude oil futures fell more than 30% at one time, reaching a daily low of $31.38/barrel.
As oil costs of Saudi are significantly lower than in other countries, we may see a price of $20/barrel later. The three major stock index futures of US stocks all fell about 4%, while the yield of 10-year US Treasury bonds fell below 0.5% for the first time as investors flocked to safer government bonds. Gold also benefited, with spot gold jumping 1% higher, bounces above $1700/ounce, but then fell back to the opening price.
The last time we saw crude oil below US $30/barrel was from the end of 2015 to the beginning of 2016, when Saudi Arabia started a price war against U.S. shale gas fields, and the dump of crude oil price caused the S&P 500 index to retreat by about 15% in a month. Looking back, bitcoin prices from mid-December 2015 to mid-January 2016 were also weak, falling 25% from around $460 to over $350.
In the past few weeks, we have witnessed that the attribute of bitcoin as a risk asset has been emphasized by the market and will continue in the short term. In the medium and long term, bitcoin, as an interest-free asset, may benefit from the downward interest rate and lower holding cost. In addition, there will be fewer and fewer assets with stable returns in the market, and more capital will pursue excess returns by tolerating greater risks.
The dump of bitcoin obviously led to panic among some investors. In fact, some people believe that the cryptocurrency market is on the way to enter the bear market again.
As Gold enthusiast Peter Schiff commented:
“It’s no surprise that this dump happened. Last week I warned many times that bitcoin’s failure to rebound at its best means that the dump is coming! Of course, it’s not a crash. A crash means we’re going to see $3000 in bitcoin. “
However, there are still many voices bullish on bitcoin and they are based on an analysis model called stock-to-flow, its inventor, PlanB, commented:
“Bitcoin S2F chart adjusted for today’s “crash” … nothing really happened, btc still spot on S2F track.”
“Tomorrow’s bitcoin difficulty adjustment (which keeps time between blocks at 10 minutes, regardless of hashrate) will be a massive +7%! No sign of weakness 2 months before the halving.”
Previously, PlanB had tweeted that it would be hard for bitcoin to fall below $8200. Surprisingly, the price sliced right through the 200-day moving average, $8,400 support and key support at $8,200. It is believed that bitcoin is starting to create its own financial ecosystem. Once investors enter the bitcoin sector, there will be no specific correlation with the broader stock or commodity markets.