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The global energy market could affect bitcoin’s(BTC) future.
According to Coindesk, there is a power struggle between Russia and Saudi Arabia in the oil market. The two countries couldn’t agree whether they reduce oil production to accommodate the slowdown or make it too expensive for the U.S. shale market.
According to Fadi Aboualfa, managing director of the MEES energy newsletter, the oil is usually cheap when the dollar is strong. However, at present, the experts do not see the changes due to coronavirus.
There are speculations that Iran will use cryptocurrency to circumnavigate sanctions to potential deals related to commodities or oil. Russia, China, and Iran are among the most ardent nations when it comes to exploring the crypto space. Saudi Arabia dominates the Organization of the Petroleum Exporting Countries (OPEC) while Russia was initially the odd one out. However, due to sanctions, some reject Iranian miners.
“Big crypto mining pools are rejecting Iranian miners because of sanctions,” said Mikhael Jerlis, CEO of the Russian EMCD.IO mining pool. “We don't give a damn about sanctions. If we get sanctioned we’d just shut down the company and open a new one.”
As the oil market fluctuates, the crypto alliance of China, Russia, and Iran is also growing impatient with U.S. sanctions and petro-dollar allies like Saudi Arabia.
“The dollar has weakened, mostly because China has been selling dollars quite liberally … in order to keep its own currency more or less stable,” said economist Daniel Lacalle. “I think there’s a part of it, in the energy markets, that is related to the tensions between Saudi Arabia and Russia.”
Bitcoin is the least correlated asset, but the market conditions may complicate the compliance risk associated with the cryptocurrency. It remains unclear what role crypto can do in future markets. According to a bitcoin trader in Saudi Arabia, the U.S. - Saudi conflict appears to ignore cryptocurrency’s potential for global trades.
Energy experts are confident that the U.S. dollar will continue to dominate the oil markets while others may try to force change that.
“China and Russia are already trying to move away from the petro-dollar contracts,” Aboualfa said. “But the U.S. [Navy] could just stop any ship that tries to import Iranian crude. It’s not really a monetary thing.”
Meanwhile, the U.S. dollar will be affected the most once central banks start to release its own digital currency. The U.S. dollar is the called the world currency, so it has the most at stake when central bank digital currencies (CBDC) start to dominate.
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