Organizations must manage their investments, assets, and relationships in this highly volatile and competitive industry. The Official site provides fast deposits, withdrawals, and trading strategies to bitcoin traders.
In the past few months, the price of oil has significantly fluctuated from a high of $140 per barrel in December 2014 to an alarming low of $26 per barrel in January 2016. This market volatility makes it difficult for companies to accurately plan for capital expenditures and expenses within the oil and gas supply chain.
One way companies can better predict their costs is by examining correlations between factors like price fluctuations in oil being a potential factor with bitcoin’s recent surges as well as other fluctuations. Oil industry executives must understand the impact of oil-related price fluctuations on their profitability and any bitcoin-related price fluctuations.
The relationship between oil prices and bitcoin is a fascinating topic. Currently, there is no indicator or trend between the two. But, the correlation between oil prices and bitcoin has existed for many years and is still a potential factor in their relationship.
The Emerging Markets Adoption:
China’s slowing economy has many effects on the world’s oil market. In 2007, the U.S. imported 22% of its oil supply; by 2014, that number had increased to 36%. Numerous factors can influence fuel prices, including proximity to wellheads, weather, infrastructure updates, and technology advancement within the oil supply chain.
One emerging market that is quickly gaining traction in Brazil. Regarding bitcoin production and mining, China is the dominant player in the emerging market for bitcoin, but Brazil is quickly gaining on it. As oil prices fall, many analysts expect to see an increase in bitcoin value due to its low-cost nature. Bitcoin doesn’t require expensive infrastructure or equipment to mine or produce.
Bitcoin and Oil Relationship
In terms of a relationship between bitcoin prices and oil prices, it seems improbable that they have any significant correlation other than they could be considered commodities. On a global scale of commodities, there has been a recent growth in technology and clean energy systems with the rise of alternative energies like solar power and electric vehicles that have displaced some of the need for fossil fuels like oil. Bitcoin and Oil in the Long Term
As more and more countries continue to reduce their oil dependence, there will likely be less demand for oil. Since bitcoin does not require any infrastructure or equipment to produce, it is a good candidate for expanding into markets that may not have previously considered it a viable option for payment or currency. Unfortunately, Japan has passed legislation to control bitcoin as a currency.
Market Supply and Demand Analysis:
Numerous factors can drive oil prices, including the relationship between supply and demand. However, there is a solid correlation between the value of bitcoin and oil prices when viewed over a long time. The exact nature of this relationship may be challenging to determine, but it does seem apparent that there is some correlation between these two assets.
If you were to look at the frequency distribution for Bitcoin, it’s clear that it could be significantly influenced by Oil prices, as both have steadily increased over recent years. So it could be good news for oil producers and bad news for those who hold prominent positions in bitcoin. Either way, bitcoin and oil’s relationship is quite interesting.
Key Takeaways:
Companies in the oil and gas supply chain could benefit from assessing the correlation between the price of oil and bitcoin. This relationship will likely continue as long as there is a demand for both bitcoin and oil. An analysis of this relationship would allow companies to maximize their investments in different industries or geographies.
One area that should be considered is the positive correlation between a falling price of oil and an increase in bitcoin price because it could benefit both industries by reducing their cost of production. There is room for more analysis regarding the bitcoin and oil value relationship in the long run.
According to its proponents, what was initially designed as a cryptocurrency (or digital currency) has turned bitcoin into an investment product that companies can compare with silver or gold.
In addition, experts believe that cryptocurrencies are, in fact, a threat to the global financial system based on oil, as they can perform transactions faster, at a fraction of the cost, with little to no need for third parties (credit card companies). Although these statements sound like an exaggeration when we compare their values with each other, they would be considered valid if we measured their impact on oil.
