- The biggest loser by value is bitcoin, which fell by 10% in the last 24 hours.
- Altcoins such as etherium, XRP etc, had posted double digit losses.
- The global oil price plummeting, triggered by the OPEC discord, is what triggered this sell off.
Crypto currency markets posted losses and saw the market fall in the wake of the global oil market crash, which triggered a massive selloff in stock markets around the world.
The clash of the two oil titans Russia and Saudi Arabia, has sent shockwaves in the energy futures markets. The discord and the resultant fall in the benchmark crude, The Brent crude happened in the wake of the Cronavirus outbreak in china which caused global panic. Oil markets fell sharply with the price dropping 34% to $27.34 a barrel. This decline happened in the wake of the global outbreak which saw decrease in oil demand in oil supply due to drop in international air travel and disruptions in logistics markets in china.
The clash of the two oil majors over production quotas led by Russia refusing to join the OPEC cartel and ramp up production and Saudi Arabia cutting crude prices and ramping up its production. This led to the oil futures and the price of Brent crude to plummet. This sent ripple effects across various markets including the crypto currency market.
The spat over OPEC production quotas between the two oil majors have caused a further push to lower oil futures and the fall in markets worldwide. There was a 30% fall in Brent crude futures to $31.02 per barrel. The DOW, S&P 500 and oil futures crashed as the OPEC production spat intensified and the coronavirus outbreak in china and its subsequent spread intensified.
Bitcoin, which is the biggest crypto currency by market capitalization, fell by almost 10% within 24 hours of this development and it closed for the week at $8,024, closing at new weekly lows.
This ripple effect caused stock markets in Japan and Hong Kong to plummet. This caused other big crypto currencies such as Ethereum, XRP and Bitcoin cash to lose value.
The long term outlook however, looks positive:
However, analysts believed this was a reactionary effect in the markets and the long term outlook for bitcoins and other altcoins looked positive in the long term. Bitcoin was up around 9% year to year in spite of the losses this week. The overall market for crypto currencies is strong, with strong fundamentals driving their growth and adoption. Traditional safe investment options such as gold also did not rise very much indicating that the market reaction to the oil price collapse is short term and is likely to ease in the coming months. Crypto currencies are nothing different, and they are likely to recover post this fall, according to market analysts.
The trend is likely to reverse in the long term and crypto currencies will recover:
Analysts believe that those who have long term goals and are looking for long term investments in the crypto currency market should see this price drop as buying opportunity and should use this price drop to build up their crypto portfolio. They believe that short term volatility in crypto markets is expected led by macroeconomic health and performance of the share markets and financial stocks. However, in the long term, investments in digital assets and futures are strong, with strong underlying fundamentals and these investments look viable and are a winning strategy.
Read More: Where Does Worldwide Blockchain Adoption Stand In 2020?
