Bitcoin, as well as oil prices, has fallen significantly within the past 24 hours. But unlike crude oil, there is so much confidence that Bitcoin will rise in value soon and even surge to new heights. Besides, the cryptocurrency’s remarkable past and current performance makes it a better investment to oil even in the face of a downtrend.
US Oil Prices Dump Significantly
On Monday, March 9, 2020, global oil prices tanked significantly to a four year low due to a price war between Suadi Arabia and Russia. The last time a decline of this nature occurred is 1999. More recently, the price of a barrel of oil dumped to $27.34, which marked a 34% decline. Analysts believe that if the price war persists, it could cause crude oil to trade between $30 and $40, which will be too low to fund certain economies.
Asides from impacting the price of oil, the price war affected the stock market which was already in a downtrend. The latter is due to fears over the spread of coronavirus and its potential to stir global economic crises. For instance, Germany’s DAX (DAX) and Europe’s FTSE 100 (UKX) dropped 7.4% and 8.5%, respectively.
Cryptocurrencies Prices Also Decline
In the face of all this, there was also a fall in the price of cryptocurrencies. Bitcoin, for instance, declined by 15% within 24 hours. Nonetheless, the top cryptocurrency is still a better investment compared to oil. Reportedly, the sharp crash in oil price is a result of Saudi Arabia pumping more oil into the market in a bid to contend with Russia.
Contrastingly, Bitcoin has a fixed supply and daily reward, hence, its reserves cannot be pumped excessively into the market. The top cryptocurrency cannot also be used as a warfare tool by one nation against another. For this reason, it’s price cannot be manipulated easily, which enables its value to resurface after a crash. In line with that, Bitcoin serves as a hedge against political and economic uncertainties.
Confidence in Bitcoin Amidst Price Plunge
Despite the most recent slump in the asset’s price, there is still an air of confidence in the crypto space. Part of the reason behind investor’s confidence, however, is the impending halving in May 2020. The halving will half the number of Bitcoins supplied to the market daily, thereby making it scarce. Also, a decreasing supply coupled with increasing demand can surge Bitcoin’s price to new heights.
Crypto analyst Plan B, for instance, said:
“#bitcoin S2F chart adjusted for today’s “crash” … nothing really happened, BTC still spot on S2F track”
On the other hand, several members of the crypto space have outlined that people need to take charge and adopt Bitcoin. American venture capital investor, Tim Draper, for instance, said banks have left millennials in a lot of debt which they can get out of by adopting Bitcoin. Chamath Palihapitiya, chairman of spaceflight company Virgin Galactic also said everyone needs to hold 1% of their asset in Bitcoin.