Bitcoin was in for a big unexpected drop early Tuesday as investors evaluated the situation in a very disappointing oil market gripped by a pandemic with no end in sight.
The digital currency plunged by 4.30 percent to $6,748 shortly after the US oil price dipped deeper into the red zone for the first time. The two critical assets remain non-correlated, but the benchmark crypto's strong bond to the stock market in the midst of an aggressively spreading coronavirus might have dragged its prices to fall.
Bitcoin's intraday retreat did not ease prices from maintaining its prevailing upward trajectory. The electronic money plummeted right into what looks like its initial support before it tried to make a preliminary pullback as it treads into Asian trading on Tuesday.
The world's most popular virtual asset in terms of market value is changing hands near the $6,820 early Tuesday, having encountered rejection past the $7,200 on Monday, CoinDesk's Bitcoin Price Index showed.
The crypto's drop was noted as the price of oil dipped on oversupply worries. Traders abandoned their May futures contract with the West Texas Intermediate crude, the major benchmark for North America, pushing prices under zero for the first time in history.
As the WTI continues to trade in very grim numbers, Bitcoin market strategists were keen to chart the extent of potential damage on the markets. Things are "not looking for long terms until we flip the weekly open," Michael van de Poppe of Cointelegraph Markets disclosed, Tuesday.
Bitcoin's current market cap wrapped up the day at $126,192,239,912. The digital currency now commands 65 percent of the crypto market. Tuesday's volume of $37,747,113,936 was the biggest it generated in three days, 75 percent above the 2020's average, and nearly 50 percent below the year's peak.
The increasing proximity of Bitcoin with US stocks remains among the most worrying downside catalysts. The oil mayhem could drag equities deeper as the week unfolds. Investors seeking to neutralize their losses could begin unloading the first profitable asset they get for cash.
According to Stack co-founder Matthew Dibb, Bitcoin's downside is more likely linked to losses in the bond market, which could be directly or indirectly swayed by prices of oil, than the downward path for crude directly.
After the United States oil prices made a shocking crash below zero on Monday, a rebound failed to curb overall losses. Should the current state with stockpiling continue to worsen despite the paradoxical price threshold, other oil markets could end up collapsing as well.
