Last April 20th, the US WTI crude oil showed a negative record for the first time. Bitcoin shows resistance amid the turmoil that the fall of commodities has caused.

The price of US West Texas Intermediate (WTI) futures contracts fell below zero dollars last April 20th. The excess in the supply of crude oil, inventories at their maximum storage capacity, and economies paralyzed due to the spread of the COVID-19 pandemic worldwide influenced this unprecedented event.

Early on April 20th, the price of a barrel of crude oil was around USD 18 but then fell to USD -37.63. In this way, it suffered a loss of USD 55.90 in a single day on WTI contracts for May in the USA.

According to analyst and trader Alberto Cárdenas, the volatility of the price of April 20th is due to a contract, which expired the following day. The delivery of the referred contract is scheduled for May, and no one can operate it, which has led to the drop in the price of the non-renewable resource to negative figures.

This is particularly occurring in the physical market due to an oversupply of oil. Now that a futures contract has expired, people do not want it, or there is no demand because there is no place to store oil. In upcoming days, oil will trade above USD 20, but these contracts will also lead to reductions in its price.

Cárdenas believes that oil has represented a thermometer for global liquidity and growth, a reason why it is currently a sign of paralysis of the economy. This situation can particularly affect Bitcoin, since cryptocurrencies are also related to the economic cycle, being likely to suffer falls or adjustments in their price in the short term.

Despite this situation with this commodity, Bitcoin currently has a price of USD 6,800 per unit. BTC has maintained prices between USD 6,100 and USD 7,200 for over a month.

Lesson in Humility

Regarding the price of oil, a Spanish cryptocurrency trader (known as @inmortalcrypto) noted that this is a lesson in humility since many people imagine that certain commodities or bonds will never reach zero.

This situation is a lesson in humility because people often say that American bonds or some markets will never fall to zero. However, many have recently recorded zero and even negative figures, like the oil market.

The also bitcoiner believes that the situation can have an extrapolation in the cryptocurrency market as the word “never” is very relative in this type of context.

According to another cryptocurrency trader (whose pseudonym is @cryptohispano01), global economic conditions could set the price of Bitcoin in the future, and oil prices to zero are an event that many did not expect.

Cárdenas said that, since the listing of BTC on the Chicago Mercantile Exchange (CME), which is the most important futures market worldwide, its trading has changed. It became a speculative commodity for large investors, funds, and Wall Street, among others. For this reason, BTC already has a high correlation to the global economic market, so volatility has been very present in recent days in the world of cryptocurrencies.

The World Health Organization (WHO) decreed last March 11th that COVID-19 was a global pandemic. A day after the announcement, Bitcoin’s price lost more than 40%, falling below USD 4,000 per unit. However, one month later, it had already recovered 90% of the ground lost.

By Willmen Blanco

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