Categories: Bitcoin Latest News

Bitcoin Analysts Ponder Impact as Oil at Highest Price Since 2008

Here’s what the latest surge in energy prices might mean for the bitcoin market, as the Russia-Ukraine conflict sends crude oil over $115 a barrel.Read MoreFeedzy

Bitcoin (BTC) is an inflation hedge, right? That’s what a lot of crypto analysts say. So, theoretically, the bitcoin market would get a boost as Russia’s invasion of Ukraine sends crude oil to its highest price since 2008.

But it’s not that simple. High oil prices might give the Federal Reserve an extra reason to worry about inflation, and that might keep pressure on the U.S. central bank to tighten monetary policy from the current, ultra-loose conditions.

In recent months, bitcoin has been falling in response to hawkish announcements from the Fed – seemingly in sync with stocks.

A question some crypto analysts are starting to ask is if bitcoin might decouple from stocks and start to trade more like a safe haven asset, similar to gold – that is, an asset whose price might benefit or even just hold its value when stocks are selling off.

“I’m wondering if bitcoin is starting to show the first signs of maturity as a safe haven,” said Jason Deane, analyst at Quantum Economics. “If so, this could, theoretically, become a positive outcome for the asset.”

Bitcoin is having its best week so far in 2022; the cryptocurrency is up 12% since Feb. 27. The latest rally pushed bitcoin into the $40,000s after news of the invasion initially sent the price down to the $30,000s. As of press time, the bitcoin price was just under $43,000.

Oil prices rose earlier Thursday to their highest point since 2008, with the U.S. benchmark West Texas Intermediate crude hitting $116.57 a barrel at one point during the trading session.

A concern expressed by a growing number of economists is that the higher oil prices might drive up prices for motorists at the pump, and also possibly push up costs for manufacturers and the transportation industry. Such a dynamic could exacerbate inflation, which is already at its highest in four decades.

Powell cited high inflation, a tight labor market and strong economic demand as reasons why the Fed needs to start tightening monetary policy.

He didn’t directly address oil in his comments Wednesday. He is scheduled to appear before the Senate Banking Committee on Thursday.

“We think the Russia-Ukraine war will intensify global and U.S. inflation pressures by pushing up oil and gas prices,” Brian Coulton, chief economist at Fitch, told CoinDesk in an email.

Coulton says that while many economists focus on “core” inflation, which excludes the impact of volatile food and energy prices, repeated “shocks” from oil prices could become a problem.

“Headline inflation shocks matter if they keep on coming,” Coulton said.

The entire debate stems from the fact that so far in 2022, bitcoin hasn’t performed as the hedge against inflation that many traders had expected.

The largest cryptocurrency by market cap is down 8% year to date as data readings on consumer prices have continually surprised economists on the upside. There’s even been talk of possible “stagflation,” where inflation is high but economic growth is negligible to nonexistent.

Traders have shown they’re more comfortable putting cash into gold, which has thus far outperformed bitcoin year to date. That’s been a knock on bitcoin’s performance.

“For crypto, the volatility and regulatory uncertainty and unpredictable swings are hurting the efficacy against inflation, oil or economic weakness,” said Mark Hackett, chief of investment research at Nationwide.

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Recent Posts

Dogecoin Price Could See Swift 175% Surge As DOGE/BTC Pair Records Major Breakout

The Dogecoin price recently surged 20% after President-elect Donald Trump announced the formation of a…

53 minutes ago

More Nodeless Non-custodial Bitcoin Lightning Wallets, Por Favor

Follow Frank on X. On Tuesday, Breez announced its latest partner, Yopaki, a Mexican neobank. Yopaki…

2 hours ago

First Mover Americas: Bitcoin Trades Around $91K as ETF Inflows Remain Strong

The latest price moves in bitcoin (BTC) and crypto markets in context for Nov. 14,…

3 hours ago

U.S. ETF Inflows Hit $4.7B Over 6 Days as Bitcoin Becomes 7th-Largest Asset in the World

Bitcoin dominance continues its uptrend and hits new highs as ETF inflows soar.Read MoreCoinDesk: Bitcoin,…

4 hours ago

What Does a 60/40 Portfolio Look Like if We Replace Bonds With Bitcoin, a Lot Better: Van Straten

Post ContentRead MoreCoinDesk: Bitcoin, Ethereum, Crypto News and Price Data[#item_full_content]

4 hours ago

Bitcoin Sets Record $93,000 High As Extreme Greed Level Hits 84

Data shows the Bitcoin market sentiment has recently seen a significant uplift as the cryptocurrency’s…

7 hours ago