The price of bitcoin saw a minor correction below 7000 as the WTI crude oil futures imploded and dropped. Bitcoin barely flinched as negative oil prices sent shockwaves through traditional markets and in relative terms has held up very well.
21 April, 2020 | AtoZ Markets – The global economy is behaving strangely. Coronavirus certainly brought the stock market down in February, and it also affected the behavior of certain markets. The fall of the oil futures contract in negative territory shows that companies have already stored large quantities of oil and cannot continue to buy more.
Historic Drop in WTI Crude Oil Futures
The May 2020 WTI crude oil futures price dropped more than 100% on Monday. In the worst case, the price reached a negative $ 37.63, a phenomenon that had never happened before. This had a moderate effect on Bitcoin, which fell below $ 7,000.
It seems that the agreement of international players to reduce barrel production has not affected the recent oil contracts. Indeed, as investors have no room to store more oil, the price of contracts has fallen to the lowest point in history. The demand for oil has certainly dropped since airlines are not flying, car travel is reduced, and many companies are not producing 100%.
The June WTI contract, which expires on May 19, also fell nearly 20% to $ 20.43 per barrel, and the Barclays IPATH ETN (OIL) fell to $ 3.50. Less than a month ago, OPEC and Russia ended their oil war by agreeing to cut oil production by 9.7 million barrels per day on May 1. This precipitous fall shows that the global economy remains fragile despite the strong rebound of the Dow and the S&P 500 in the past three weeks.
Bitcoin Falls Below $7,000
The price of Bitcoin (BTC) also corrected by 4.23% and at $6,800 following the implosion of the WTI futures. When the drop of oil prices started, the price of Bitcoin fell below the $ 7,200 support. It was after failing to overcome the resistance of $ 7,270 over the weekend.
After losing the round of $ 7,000, the price has gone through more critical support at $ 6,850. Traders are currently struggling to keep the price above this level. Ethereum (ETH), the second-largest cryptocurrency, fell 5.64% and is now trading at almost $ 173 per coin. The XRP also saw a decrease of 4.49%, bringing the digital assets to $ 0.185.
Bitcoin must stay above this level if it is not to continue to fall. Investors must follow current market events if they want to understand how to operate better in these markets. Bitcoin will experience a halving event as soon as in 22 days. So, traders could witness volatility in the coming weeks, both before and after the halving.
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