Bitcoin, the overall crypto, and the stock market are currently at the mercy of Russia, which controls the crude oil supply. Crude oil plays an essential role in the global financial sector and can make or break the world’s economies.
Just recently, JP Morgan published a report predicting the price of crude oil could reach “stratospheric” levels of $380 per barrel in 2023. Crude oil is currently hovering around $100 per barrel.
Analysts from JP Morgan claim that Russia might retaliate against sanctions imposed by the U.S and European countries by cutting its crude oil output. If Russia retaliates against the sanctions, oil prices could shoot up and wreak havoc on the world’s economy.
Also Read: Where is ‘Crypto Queen’ Ruja Ignatova Hiding? Decoding the Mystery
Prediction: Here’s Why Bitcoin & The Crypto Market Could Crash
Oil controls the modern world, and the markets react and dance according to its tunes. A dramatic increase in oil prices can tend to be the collapse of economies, and high oil prices cut through the expected rate of planned economic growth and increase inflation of all goods and commodities. Therefore, skyrocketing oil prices dampen economic prospects and, in return, lower companies’ yearly earnings.
When top companies suffer losses from high oil prices, job losses, wage cuts, and a freeze in hiring kicks in, this development turns into inflation, where prices are high, and wages don’t catch up to the rising cost of living. If inflation is not brought under control, it paves the way for a recession and brings economies to a standstill.
Therefore, oil is essential for the stock and the crypto markets to survive and thrive.
Also Read: Bitcoin’s Chart is Disastrous, Could Fall to $14,600 Next: Claims Analyst
If JP Morgan’s $380 per barrel prediction turns out to be accurate, institutional investors will exit their holdings in stocks and cryptos. This could make the markets freefall, and Bitcoin might reach a new low. Fund outflows could be much higher than inflows, as investors fear investing their money in the markets. In addition, retail investors might not have purchasing power due to job cuts and inflation eating up their savings.
The markets have always reacted negatively when the price of oil shoots up, and this time won’t be any different. Now at $20,000, Bitcoin might fall to lower numbers and cause devastation in the crypto industry.
Nonetheless, the markets can be a little less ruthless if JP Morgan’s $380 per barrel prediction doesn’t come true. The markets are poised to slow down due to rising inflation and fears of an upcoming recession.