Bitcoin falls to two-month low

Leading crypto dips below $8,000, triggered by Saudi-Russia oil price war

Bitcoin (BTC) has fallen to its lowest point since early January. By mid-morning GMT the world’s leading crypto has dropped more than 5 per cent to stand at $7,810.45.

This dip below $8,000 comes amidst a significant market sell-off , which some investors are already dubbing Black Monday. While the Covid-19 outbreak has haemorrhaged global markets since late January, Monday’s significant plunges have been triggered by a full-scale oil price war between Saudi Arabia and Russia.

After Russia refused to agree to the Organisation of the Petroleum Exporting Countries (OPEC) proposal to cut oil production further in order to buoy the commodity’s value, Saudi Arabia slashed its oil price. As a result, oil prices have suffered their largest drops since the First Gulf War in 1991.

With the FTSE 100 and pan-European Stoxx 50 indices both falling around 6 per cent by mid-morning trading, the oil shock has spilled into all markets.

While Bitcoin may still be up more than 100 per cent in the past year, the crypto has lost more than 20.57 per cent in value in the past month alone. The drop has called into question the argument that Bitcoin is an alternative safe-haven asset at times of economic uncertainty.

As the digital currency is still up more than 9 per cent on the year-to-date, others have argued that it is still a valuable hedge.

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Other cryptos have also suffered amid the uncertainty, with both Bitcoin Cash (BCH) and Bitcoin SV (BSV) falling more than 15 and 14 per cent respectively. At $201.89 Ethereum (ETH) has dropped more than 12.6 per cent, while XRP has dropped by 10.38 per cent to stand at $0.2077.

Last week Brian Armstrong, CEO of Coinbase, the largest American crypto exchange, mused that Bitcoin could eventually be superseded by an alternative coin: “I think it's still very much up in the air which blockchain will help get crypto from [around] 50 million users to 5 billion.”

In the short-term however, with a market capitalisation of around $143bn, Bitcoin looks set to hold on to the number one spot. Second and third placed Ethereum and XRP both lag significantly behind BTC in market cap. Although Tether (USDT) continues to lead in trading volume.

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