Bitcoin generally does not show any correlation with traditional assets. Still, it fell below $ 8,000, especially after the oil market fell over 30%. After several weeks of struggle, crude prices have bounced back. Does this mean Bitcoin bulls will be more emboldened by market conditions?
In recent weeks, Bitcoin and oil have shown a very close correlation. In fact, the intervention of price changes was even more important than bitcoin’s comparison with exchanges. The volatility of prices has delayed the Bitcoin-oil correlation a bit.
Note that this correlation is only temporary and may be valid during market turmoil, particularly affecting institutional investors. Historically, Bitcoin has little to do with oil and may even show an inverse correlation at a later date.
Since the beginning of the month, oil prices have bounced back, rising over 24%. Currently, Brent and WTI futures are trading at $ 25 and $ 20, respectively, from $ 33.41 and $ 26.73.
That rally grew after US President Donald Trump said he had contacted Russia and Saudi Arabia and urged the two oil producers to reconcile and cool the conflict.
Last month, Saudi Arabia waged a price war against Russia by slashing crude production and prices, which surprised markets when demand fell, especially amid the covid-19 outbreak.
Commodity investors hope the two countries will soon reach a consensus. Overall optimism has boosted oil prices, and that could be the additional boost for Bitcoin to consolidate above $ 7,000. So far, the largest cryptocurrency has failed to stay above that level.