OPEC’s decision to cut supply in order to prop up prices could have a positive effect on crypto markets. If oil prices increase as a result of the production cuts, it could lead to increased investment in cryptocurrencies as a hedge against inflation. In addition, higher oil prices could also lead to increased demand for energy-intensive cryptocurrencies like Bitcoin, which would potentially drive up prices.
Weiskopf said that “if oil prices go up, and they’re a significant part of the cost to mine Bitcoin, then you would think that would have some negative impact on the price of Bitcoin.” He added that “higher energy prices would also lead to increased demand for energy-intensive cryptocurrencies like Bitcoin, which would potentially drive up prices.”
On October 5, 2022. OPEC+ announced that they will be cutting back on oil by 2 million barrels per day. Biden criticized the move saying he’s disappointed. Since then oil has jumped 4% and could reach back to $100. OPEC is cutting production by 2 million barrels per day in order to raise prices. This is because they fell short of their output target in August, meaning that less oil was produced than planned. The cuts will mainly come from Gulf OPEC producers such as Saudi Arabia, Iraq, the United Arab Emirates and Kuwait.
Effect on crypto miners
Bitcoin miners will be affected by increasing oil prices in a few ways. First, if the price of oil goes up, the cost of electricity will also go up since most bitcoin mines are powered by oil-fired generators. This will increase the operating costs for bitcoin miners and reduce their profit margins. Second, higher oil prices could lead to political instability in countries where bitcoin mines are located especially in Russia & China. This could create security risks and make it difficult for miners to access their rigs or receive payments.
Bitcoin’s Correlation With Gold Hits Highest Level in Over a Year
Bitcoin’s reduced tendency to move in tandem with U.S. stocks has refocused analysts on a correlation that’s suddenly strengthening: the cryptocurrency’s connection to gold. The two assets’ merging paths follow a recent trend, branching away from stock prices, which have sunk dramatically this year, and buttressing arguments by bitcoin evangelists that so-called digital gold offers the same safe-haven advantages as the real stuff. BTC and gold will continue to travel in sync.
The 30-day correlation between gold and bitcoin has ranged between positive and negative 0.2 since late last year, but last week it reached over 0.3, its highest in over a year. Even as cryptocurrencies decoupled from equities, the correlation between gold and bitcoin remained strong.
BTC and stocks
Gold prices have been volatile in recent weeks, falling about 5% since early September. In contrast, bitcoin prices have been relatively stable, falling about 1% over the same period. The paragraph above discusses the positive correlation between gold and bitcoin prices. Gold prices have been volatile in recent weeks, falling about 5% since early September. In contrast, bitcoin prices have been relatively stable, falling about 1% over the same period. Even as cryptocurrencies decoupled from equities, the correlation between gold and bitcoin remained strong.
The current BTC/gold correlation is weak and positive, but it is too early to tell if this will continue. BTC’s low volatility is likely responsible for the current correlation.