We are witnessing a behavior of historical oil prices š¢. Which leads us to ask: Can Bitcoin drop below 0? Will the “oil effect” carry over to crypto verse?
The WTI (West Texas Index), is one of the 2 most important indices along with the BRENT. But they are not the only ones that measure the average of oil prices that have similar characteristics, sweetness, viscosity and other characteristics.
Today, the WTI has behaved historically, even falling to negative levels. Which, in a nutshell, means that producers are paying for their buyers to take oil from their warehouses. But be careful, this does not mean that all oil today has a negative price.
Coming up to – $ 40, and currently circulating at – $ 30, the WTI has lost almost 300% of its value in a matter of days. And the traditional world of natural resources is shaking with panic.
If we were behaving similarly in the crypto world of Bitcoin, everyone would already be talking about the end of cryptocurrencies. Is this the end of oil? Can bitcoin drop below 0?
Why is WTI oil trading at negative levels?
Many can be the factors of this behavior. But, without a doubt, the āCoronavirus Effect š¦ ā is one of the causes of this economic debacle.
The new pandemic has caused many of the world’s countries to stop their operations. China and India, for example, are the two largest consumers of crude oil in the world. And these have cooled down their activities and, therefore, the demand for oil has decreased significantly.
In the case of China, it is the first time in 50 years that its first semester will end in negative performance in its economy. Although these countries are already lifting quarantines and lighting their factories, their buyers are still in the midst of a massive health crisis, which is imminently leading to a global recession.
This, together with the price war that has started 2 of the world’s largest producers, Russia and Saudi Arabia, have caused prices to fall due to the excess supply of oil in the world.
Like domino pieces falling in a row, the reduced demand for oil by the Coronavirus, and the oversupply of the price war, have generated what we are seeing now.
Normally, countries sell oil to their buyers in 30-day contracts, in which the price is set first, and for a whole month the price of that contract cannot vary.
The world freezes, the “oil effect”
Today WTI contracts have expired. And the demand for oil fell further. Along with the fact that the warehouses of the American producers were filled to their maximum capacity by the low demand, generating that the producers will pay to empty their tanks, and be able to continue producing “black gold”.
In addition, the BRENT contracts, which are still trading at $ 20, are about to expire. Meanwhile, the traditional market is paralyzed by the panic of negative prices for the main source of energy on the planet. The oil effect becomes a new variable in this world crisis.
Can bitcoin drop below 0?
Bitcoin is completely decentralized, and therefore, if the trust of all its inhabitants is lost, its price may drop to 0, but not less than that value.
But, in the real world, Bitcoin is currently emerging as humanity’s new Safe Haven. So as long as there are people in the crypto ecosystem, the price of BTC will not be able to touch 0.
Another situation is that, unlike oil, the miners’ tanks cannot be filled, and they will not pay to get rid of their BTCs, since they do not occupy a physical space, nor do they depend on any centralized entity for their distribution.
As the whole world falters, Bitcoin is getting stronger, as more and more ordinary people are realizing that “Governments lie”, and that the freedom offered by cryptocurrency is complete.
Most likely, we will see BTC volatility increase in the following days. Not because Bitcoin is reeling, but rather that we should be aware that perhaps since World War II, humanity as a whole did not see how its floor crumbles under everyone.
Therefore, there are many people confused and afraid of the future. Will the oil effect carry over to crypto verse? Without a doubt yes, but, perhaps it is in a positive way.
That is why we must know that the context is very complicated for everyone. None of us know when this can end. In addition we must be sure that the value of Bitcoin is not its price level. But, everything that can contribute to humanity.
