First Mover: 10 Takeaways for Bitcoin From Negative Oil Prices

U.S. oil futures prices turned negative Monday for the first time ever. Is it good or bad for bitcoin?

The coronavirus pandemic has so completely upended the global economy that energy demand has fallen off a cliff. People are barely driving. People are barely flying.

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The imbalance came to a head this week as oil storage tanks started to fill up, forcing traders to pay extra to get rid of their delivery obligations – resulting in negative prices. The May futures contract on West Texas Intermediate crude, which expires Tuesday, tumbled to minus $37.63 a barrel, from a positive price of about $30 on Friday. The June contract slid 15% to about $21 a barrel, leaving the black gold down more than 60 percent in 2020.

Bitcoin slid 3.5 percent on Monday to about $6,900, a pretty tepid reaction for notoriously volatile cryptocurrency markets.

So what are the takeaways from the unprecedented oil-price sell-off? CoinDesk gathered the views of crypto-market traders, analysts and executives. (Quick teaser: Bitcoin suddenly doesn’t look so volatile compared with oil, as noted by pro-crypto twitterati here and here.)

1) In the short term, falling oil prices are deflationary. Drivers will need less money to pay for gasoline, once they return to driving. Airlines will pay less for jet fuel. Plastics manufacturers will see lower input costs. More broadly, for bitcoin traders who see the cryptocurrency as a hedge against inflation, the oil-price crash offers a warning of how deflationary the coronavirus-driven economic recession might turn out to be – despite trillions of dollars of money injections from the Federal Reserve and…

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