Global Economy Collapse Affect on Cryptocurrency Industry
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The collapse on the international oil market
On Monday, March 9, the oil market crashed due to the collapse of the oil deal between OPEC (The Organization of the Petroleum Exporting Countries) and Russia, which officially ends in late March. The Russian Federation refused to reduce oil production in response to reduced demand due to coronavirus. In response, Saudi Arabia lowered prices for April shipments by $ 6-8 to regain market share and put pressure on Russia.
In connection with these events, the price of oil of the American brand WTI fell by 30%. On Friday, trading closed at around 41.28 dollars per barrel and on Monday morning oil was trading below $ 29.The cost of Brent crude oil collapsed from $ 45.27 to $ 32.
Global markets collapsed after fears about the spread of the coronavirus were exacerbated by the erratic situation in the oil markets. Dow Jones 30 futures fell 1256 points, or 4.9%, S&P 500 futures contracted 5.0%, Nasdaq 100 contracted 4.8%, STOXX 600 fell 5.9%, the UK FTSE 100 and German DAX – by 6.2%.
Italy transferred about a quarter of its population to poorly defined quarantine, which guaranteed a significant blow to the eurozone economy in the first quarter. Affected regions include Lombardy, Veneto and Emilia-Romagna – three the most important and economically productive country’s regions.
What awaits cryptocurrency?
The rapid decline in global stock markets and the quarantine of production regions in Europe and The USA due to the coronavirus was followed by a global decline in the value of digital currencies:
- Ethereum fell by 13.62% to $ 199.41;
- Ripple (XRP) by 12.17% to $ 0.20;
- Bitcoin Cash by 17.15% to $ 265.73.
What led to the fall of Bitcoin?
As technical analyst at Brave New Coin, Josh Olszewicz, explained, a drop in the price of Bitcoin – “A side effect of a decline in global markets.” “Global markets are falling, and bitcoin is receiving collateral damage. The price will decline until panic in global markets ceases.” – he said.
The expert noted that the price of oil fell by more than 30%, and the yield on 30-year US bonds fell below 1%. “Coronavirus was not the cause of all this, but it certainly became a catalyst.” – Olszewicz said.
Cryptocurrency Pyramid PlusToken
Launched in 2018, PlusToken project becomes China’s largest cryptocurrency scam – the organizers allegedly fled with $ 3 billion of user funds. In total, over the past year, scammers stole $ 4.4 billion in cryptocurrencies, and the PlusToken scheme made the largest contribution to this amount.
Chainalysis in December noted that PlusToken organizers still have 20,000 BTC, which will continue to put pressure on the market. Analysts recorded the previous movement of Bitcoin by PlusToken organizers last month (February 11), which then led to a drop in BTC, which lasts the entire second half of the month.
About 13 thousand bitcoins worth about $ 117 million owned by the organizers of the PlusToken cryptocurrency pyramid were transferred to mixing services. Redistribution of assets on exchanges and their sale occur almost simultaneously. This movement of assets negatively affects on the BTC.
Bitcoin began to decline on Saturday evening, after several days could not overcome the resistance at $ 9,200. By the end of the week the price dropped to $ 8300 and on Monday, March 9, reached $ 7850.
BitXmi analysts say:
Despite the annulment of the ban on crypto trading in India, the legalization of digital asset trading in South Korea and the recognition of cryptocurrency as a financial instrument of the German financial supervisory authority (BaFin), Bitcoin fell below $ 8,000. BitXmi financial analysts support the point of view of Josh Olszewicz, and believe that while the global economy is in decline, the price of Bitcoin will also decline.
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