Bitcoin Shows Strength Despite Rising Oil Prices

Marcus Sotiriou, Analyst at the UK based digital asset broker GlobalBlock

Bitcoin BTC/USD continued to climb yesterday and is holding above $43,000 despite fears about rising oil prices. WTI Crude Oil rose by over 5% as Putin said he wants payment in Rubles for Russian gas. As the EU get around 40% of their gas from Russia, this has huge implications. Although Bitcoin is remaining strong in the short term, rising oil prices increases the likelihood of a recession over the coming year or so. Oil has increased by around 25% in the past 6 days alone, and Bitcoin bulls will want to see this tail off for continued strength.

Despite the uncertain macro environment, crypto developers continue to innovate and whales continue to accumulate Bitcoin. Luna LUNA/USD founder Do Kwon has revealed plans to buy $3 billion worth of Bitcoin in the short term for Luna’s reserves, with a longer term goal of $10 billion. He said, “we have $3 billion of funds ready to seed this reserve, but technical infrastructure (bridges etc) is still not ready yet.” He plans to purchase Bitcoin in $125 million increments, with the first payment being made yesterday. Tens of thousands of Bitcoin being bought and taken off the market will likely have a significant impact on price over the coming weeks/months. Bitcoin bears will have a hard time fighting the buy pressure and in my opinion sellers will get exhausted, leading to a move to the upside above $45k, assuming oil prices do not make new highs.

Whilst Germany are at high risk of falling into a recession, with a contraction of 0.7% in GDP last quarter, a report from Kucoin shows that 44% of Germans plan to invest in crypto. KuCoin CEO Johnny Lyu, said "Cryptocurrencies are very popular among the supporters of the accumulation strategy, especially among the younger generation. They prefer to save for retirement on their own and diversify their savings through the use of cryptocurrencies." After Germany took a huge step last year by approving special funds (amounting to over $200 billion AUM) to invest in digital assets, Germany has provided a favourable environment for people to invest.