Bitcoin, the mainstream cryptocurrency and the stock market are currently at the mercy of Russia, which controls the supply of crude oil. Crude oil plays a vital role in the global financial sector and can make or break the global economy.
Recently JP Morgan published a report predict that the price of crude oil could reach “stratospheric” levels of $380 a barrel in 2023. Crude oil is currently hovering around $100 a barrel.
JP Morgan analysts argue that Russia could retaliate against sanctions imposed by the US and European countries by cutting crude oil production. If Russia retaliates against the sanctions, oil prices could skyrocket and hurt the global economy.
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Prediction: Here’s Why Bitcoin and the Crypto Market Could Crash
Oil rules the modern world, and the markets react and dance to its tunes. A dramatic rise in oil prices can be the collapse of economies, and high oil prices cut the expected pace of planned economic growth and increase the inflation of all goods and commodities. Therefore, skyrocketing oil prices weigh on the economic outlook and, in return, the annual profits of companies.
When top companies suffer losses from high oil prices, job losses, wage cuts and a workforce freeze, this trend turns into inflation, where prices are high and wages fail to catch up with the rising cost of living. If inflation is not brought under control, it will pave the way for a recession and economies will grind to a halt.
Therefore, oil is essential for the stock and crypto markets to survive and thrive.
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If JP Morgan’s forecast of $380 a barrel proves accurate, institutional investors will exit their positions in stocks and cryptos. This could send the markets into free fall and Bitcoin could hit a new low. Fund outflows can be much higher than inflows because investors are afraid to invest their money in the markets. In addition, private investors may not have purchasing power due to job losses and inflation draining their savings.
Markets have always reacted negatively when oil prices skyrocket, and this time will be no different. Now, at $20,000, Bitcoin could plummet to lower numbers and wreak havoc on the crypto industry.
Nevertheless, the markets could be a little less ruthless if JP Morgan’s forecast of $380 a barrel doesn’t come true. The markets are about to slow down on the back of rising inflation and fears of an impending recession.