Can The Oil Slump Crash Bitcoin?

The recent oil crash is one of the most important developments in the last two decades. The 4H chart for WTI Crude Oil (USOIL) shows that the price of oil is at the lowest level it has been in 21 years and this is not even the floor. The price is very likely to decline below $10/barrel but it might not happen straightaway when everyone is expecting it now. We have previously seen that major slumps in the oil market have led to short-term upside before the downtrend ensues. Something similar might happen this time which is why we think BTC/USD and the rest of the cryptocurrency market might still be headed for further upside before the next major decline.

The situation in the stock market continues to remain volatile. We are now at a point where major shifts can be expected and the market could see short-term downside due to pressure from the oil market. The S&P 500 (SPX) has finally tested the 61.8% fib retracement level as we predicted and is now ready to fall short-term. I expect to test the 61.8% fib level again some time in the near future before the downtrend begins. This would give BTC/USD the room to rally towards $8.4k-9k to fill that CME Futures gap. For now, investors are worried and there is too much fear and panic in the market which means that we should start looking the other way.

While this is not the time to be bullish on the market, it may also not be the time to be bearish. The best approach here would be to wait for better entries to short the market. Meanwhile, the market might see some downside for now in reaction to one of the biggest single day declines in crude oil but things might soon normalize after that at least for short-term. Long term, the demand for oil is expected to reduce drastically and I think Coronavirus was just an alibi that the market needed. The EUR/USD forex pair also risks further downside but a decisive break has yet to be seen. I think major financial markets are close to seeing a decisive move but for now we could see some days of inconsequential trading before that happens.