For All Those Challenging BTC’s Use As A Store Of Value During The Crisis, I Beg To Differ: Analyst
Bitcoin has been keeping above $7,000 for some time now but time and again it falls below the crucial support line. After a brief stint yesterday, today, we are back under $7k, going as low as $6,775.
Surging open interest on bitcoin futures while the price continues to decline is also not favorable to BTC price.
I dont think this is a good look for bitcoin
Open interest is rising here as price falls
I expect further downside, longs stepping in here will only be used as fuel to drive price lower if/when they will be forced to close their position pic.twitter.com/81tnMeBlk0
— Theo📚 (@theo_crypto99) April 20, 2020
Just like bitcoin, the US stock market is sinking as oil prices turn negative. Monday’s losses are extended into Tuesday, with the US crude futures plunging below zero for the first time in history.
So much decline in the prices, so much so that traders are paying to take oil off their hands is the result of collapsing demand for oil in the coronavirus pandemic hit the market. Despite a deal by Russia, Saudi Arabia, and other nations to cut production, the world is running out of places to store about 100 million barrels a day of production.
“If you are a producer, your market has disappeared, and if you don’t have access to storage you are out of luck,” said Aaron Brady, vice president for energy oil market services at IHS Markit. “The system is seizing up.”
Meanwhile, Bitcoin holding its value
The pain in oil markets is carrying over to stocks and the crypto market. With oil trading less than for a cent, the oil/BTC ratio is off the chart. Yesterday, only the May futures were collapsing because they are expiring today and no one wants delivery of that.
But today, June futures are tumbling as well, given that the storage is already full with countries in lockdown, next future contracts don’t seem a good opportunity to buy low either.
“For all those who've challenged bitcoin's use as a store of value or the narrative that bitcoin hasn't held its value all that well during the crisis, I beg to differ,” wrote analyst Mati Greenspan on the oil debacle.
— PlanB (@100trillionUSD) April 20, 2020
…and gathering interest & favorable scenario
The latest data from CME, highlighting that its products reached all-time highs in terms of unique accounts last month supports the growing interest in the market. The bitcoin futures curve flipped back into contango as well, though modestly.
Bitcoin is also seeing heightened interest, with legendary Renaissance Technologies’ flagship hedge fund Medallion being the latest one to dip their toes into crypto trading.
In the current world where markets are manipulated by central banks, bitcoin is looking more and more like an attractive option.
Also, Bitcoin will be the option when “investors will be looking for yield in a world with US stocks at record valuations, rates zero or negative, and commodity prices tanking,” said analyst Ceteris Paribus.
Last tweet before bed… 5 yr yields = pure chart porn. Probably the best looking chart in the world. Yields are going to zero. Good night all. pic.twitter.com/8FX8xtH5vx
— Raoul Pal (@RaoulGMI) April 21, 2020
In other news, the Treasury Department is evaluating whether it has the authority to stop banks from seizing the stimulus payments to settle the debt. The Trump administration came under fire after banks withheld economic relief money meant to help struggling Americans pay for their essential expenses like food.
Such a situation only further presses upon the advantage of bitcoin, a hard asset that is unseizable.