Oil Price: Two years ago, oil prices hit zero, but then rose again. In an increasingly unstable world, Bitcoin prices could also shoot up. In light of this idea, a ‘crypto winter’ is not something to worry about.
An increasingly unstable world makes predictions hard to make, and every scenario brings surprises. Let’s take a look at the volatility of oil prices and compare it to the volatility of Bitcoin.
Oil Price: From “Zero” to “Hero”
In the first months of 2020, the price of oil actually went past zero into negative territory. The volatility of oil prices has surprised everyone.
The world is being constantly impacted by unexpected events. No one expected the arrival of the pandemic to make oil prices negative. No one expected that war would break out, causing the price of oil to continuously increase sharply while many other assets were declining.
So, it can be said that the state of the world is making economic theories and predictive models weak. Sharing the same opinion, @scottmelker (The Wolf Of All Street) said:
“The world is in a bad state. Markets are rough. That said, I’m seeing a lot of panic, fake news, bad takes and overreactions to the current situation based on ideas of what could happen. Being prepared, fine. But remember – NOBODY knows what comes next, so remain calm.”
At the time, did we ever imagine that oil prices would hit zero? Or that oil prices might reach a new high two years later? There is absolutely no predictive analytics or algorithm that could have foreseen that.
Bitcoin too?
If someone says, “Bitcoin is a very sensitive asset and easily depreciates!” then show them the price of oil.
It is worth noting that the fundamental philosophy that Bitcoin arose from has existed for more than a decade. Recently, Apple co-founder Steve Wozniak said that Bitcoin (BTC) is “the mathematical version of gold.”
Will trust in the banking system and centralized government remain stable in an increasingly unstable world? No one can deny that another “black swan” event could happen that will cause the public to shift faith from gold to Bitcoin.
An example scenario is: What if World War 3 (which no one wants) happens and panic over where to store value will make Bitcoin a ‘hero?’
It is entirely possible because the world is full of ‘black swans.’
Genuine Bitcoin holders will not only hold BTC because of the price but because of their belief in Bitcoin’s underlying philosophy.
We will watch this space.
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