The price of Brent crude oil posted its deepest weekly drop in recent months. At the same time, the bitcoin price showed practically no reaction to the event. Over the week, Brent fell by 9%, while the leading cryptocurrency dipped by just 1%. Such a price gap casts doubt on the strength of the link between the black gold market and digital gold. For a long time, many traders and analysts considered this dependence an immutable market rule.

Some market participants traditionally view rising energy prices as a green light for a further rebound of the cryptocurrency market. However, the real intrigue lies in inflation indicators, the distribution of positions on exchanges, and the behavior of the miners themselves.

Why traders link bitcoin’s bottom to the fall in oil

This week, the global benchmark Brent dropped below the $80 per barrel level, losing about 9%. At the same time, the American benchmark WTI plunged and settled around $70.

The decline came after the US and Iran agreed to resume operation of the Strait of Hormuz.

A common view among traders is that after a sharp decline in oil, bitcoin often forms a global bottom. Some expect new growth in oil prices in the second half of the year due to a possible escalation between Iran and Israel, as well as the anticipated introduction of fees for passage through the Strait of Hormuz. According to their calculations, it is precisely this rebound in oil that could trigger another wave of bitcoin sell-offs and form the year’s low.

The risks of such scenarios are not easy to dismiss. Iran has just suspended 60-day talks with the US — this could once again push prices up. But the link between oil and bitcoin is based only on isolated episodes: if you look at the data for the past five years, no obvious dependence can be seen here.

Source: BeInCrypto