The Impacts Of Bitcoin Price Volatility On Crude Oil Markets

Last Updated November 14th 2022
3 Min Read

Since its launch, Bitcoin has been on a growth trend, though with some price fluctuations. Bitcoin traded at $12 in 2011, rose to nearly $20,000, and then plummeted to almost $7,000. Currently, Bitcoin has taken a rising trend towards the $20,000 mark again. In short, Bitcoin market prices are prone to volatility due to assorted factors. Crude oil, on the other hand, is among the prime assets today that have attracted the attention of Bitcoin investors. However, changes in Bitcoin prices tend to impact the crude oil market. If you are interested in Bitcoin trading, you may also visit biticodes website.

Trading cryptocurrencies in real-time is necessary for individuals interested in crude oil markets. With platforms it is easy to analyze the crypto markets and embark on safe trading under government authorization. Here are ways via which Bitcoin price volatility impacts crude oil markets:

Demand And Supply Of Bitcoin 

Demand in the crude oil markets changes with the availability of Bitcoin. In essence, the Bitcoin market trends tend to shape the crude oil markets regarding the amount traders can buy. For instance, if the Bitcoin price rises, traders will likely buy more and hold them in readiness for a higher fortune soon. In other words, traders are less likely to divert their Bitcoin to crude oil markets when there is an opportunity to make returns under bullish market circumstances.

On the other hand, when Bitcoin prices reduce, there are high chances of diverting the tokens to crude oil markets. And this is usually the case when crude oil prices project a high price growth rate compared to Bitcoin within a specific period. An increased supply of crude oil grants Bitcoin investors the opportunity to re-channel their investments in readiness for better crude oil markets in the future.

Inflation 

Inflation has been a significant concern over the past years due to adverse events and occurrences affecting global economies. For example, people have associated the Russian-Ukraine war with a substantial portion of the prevailing global inflation. Similarly, the CoronaVirus pandemic also impacted the global economy by contributing to high inflation rates between 2019 and 2021.

Inflation is among the core drivers of the crypto markets. In instances where inflation hits hard, the prices of Bitcoin subsequently reduce. And this means that the impact transfers into the crude oil markets, whereby Bitcoin investors grant lower offers than usual. Therefore, inflation is akin to fluctuations in crude oil prices worldwide.

Bitcoin Adoption 

The urge to make Bitcoin rank as one of the valuable assets like gold and crude oil is evident today. Although governments have not implemented regulations on the usage of Bitcoin, developers keep pushing for recognition of Bitcoin as a valuable asset. Today, Bitcoin's adoption has increased worldwide, whereby individuals and companies use it to purchase specific products. However, it is notable that the rate of Bitcoin adoption translates to the trust people have in it as a medium of payment. Currently, Bitcoin is arguably pretty adopted and endorsed hence creating some limitations as far as influencing crude oil markets is concerned.

Conclusion 

A positive relationship between Bitcoin and Crude oil prices creates a stable environment for investors. On the other hand, when the costs of Bitcoin do not resonate well with those of crude oil, some negative impacts emerge on the crude oil markets, whereby demand may be drastically affected. Therefore, crude oil and Bitcoin investors should constantly study the crypto and oil markets to remain alert to the price changes and make informed decisions.

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