Oil, stocks, bond yields, and cryptocurrencies plunged Monday after Russia refused to join other oil producers in cutting output in response to the novel coronavirus, sparking a price war. Crude-oil futures took the water-slide down by more than 30% — the biggest one-day drop since the 1991 Gulf War — on the prospect softer global demand.
Cryptocurrency markets nosedived following a plummet in oil prices. The market capitalisation of cryptocurrencies dived $26.43 billion from a day earlier at around 1:17 p.m. Singapore time. Bitcoin, the biggest cryptocurrency by value, fell over 10% in 24 hours at around the same time.
The violent sell-off in the cryptocurrency market comes after international oil benchmark Brent crude futures plummeted 30% to $31.02 per barrel, its lowest level since Feb. 2016. That was sparked by Saudi Arabia slashing its official selling prices for oil after OPEC failed to agree a deal on production cuts. This has led to fears of an oil price war. Brent has since pared some of its losses.
Meanwhile, stock markets in Japan and Hong Kong fell sharply while U.S. stocks are set for free-fall at start of trading on Monday.
It will be difficult for nations to reconfigure their supply chains to circumnavigate the oversaturated market. Although nations like Iran appear to be interested in using the bitcoin mining industry to turn cheap power into global assets, there no serious interest in bitcoin as a market alternative any time soon. The other big digital coins ethereum, XRP and bitcoin cash, posted double-digit percentage point losses as well.
Huge moves in cryptocurrency prices are not unusual and these digital coins are known for their volatility. Market players however said this could be an opportunity to buy some bitcoin.
For those who have long investment horizons in cryptocurrency, experts suggest that they can consider buying in during these market dips. Investors can expect more of this volatility sparked by macro health and financial shocks, but ultimately long term investments in the digital future can potentially pose as a winning strategy.