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Monday’s historic financial tumult reached beyond stocks, sinking commodities and even bitcoin markets, Coindesk reported.

“I don’t think any asset is safe right now – except cash, US dollars,” said Ali Khedery, formerly Exxon’s senior Middle East adviser and now CEO of US-based strategy firm Dragoman Ventures.

While bitcoin prices dropped nearly 10% over the weekend, Saudi Arabia slashed its export oil prices when Russia refused to support an Organization of the Petroleum Exporting Countries (OPEC) effort to reduce oil production. Coronavirus quarantines mean fewer cars on the road, economic slowdown and less demand for oil, experts warn.

Matt Smith, director of commodity research at ClipperData, described the current state as an “oversupplied” oil market where Saudi Arabia made a drastic move, harming everyone’s bottom line, in an effort to “to get Russia back to the negotiating table.”

Smith said it will be difficult for nations to reconfigure their supply chains to circumnavigate the oversaturated market. Although nations like Iran appear to be interested in using the bitcoin mining industry to turn cheap power into global assets, both Smith and Khedery agree there’s no serious interest in bitcoin as a market alternative any time soon.

“In times of crisis, all markets correlate,” Smith said, arguing the dip contradicts bitcoin’s “safe haven” narrative.

Plus, an anonymous bitcoin mining farm operator in Iran said many operations are stalled by regulatory setbacks like penalty fees for subsidized electricity. Bitcoiners may be thrilled about the potential to turn surplus energy into bitcoin, but so far it doesn’t appear as though OPEC members are prioritizing mining infrastructure for that approach. The Iranian miner said the local industry doesn’t appear to have any connection to strategies for abating a broader market crisis, at least none civilians are aware of. 

Yet if the oil market continues to plummet, Khedery said, “It may cause Iran, Iraq and Venezuela to collapse.”

“Iran is in deep trouble,” Khedery added, speaking of the oil-exporting nation hampered by both sanctions and a coronavirus outbreak.

Regardless, bitcoin bulls remain unfazed. Electric Capital co-founder Avichal Garg tweeted bitcoin may become a safe haven asset in the future. Bitcoin-focused investor Tuur Demeester said he expects the broader market chaos to increase bitcoin’s dominance on exchanges.

“What you want in a period of crisis is options,” Demeester said. “You’ll be attracted to an asset that’s liquid. … There are some people who are being forced to sell [bitcoin]. But, overall we’re in a very healthy [bitcoin] market.”

Likewise, Gabor Gurbacs, director of digital asset strategies at VanEck/MVIS, said adopting a bitcoin strategy is in the best interest of any country heavily involved in energy markets.

“While for now the petrodollar system remains dominant and the US dollar outperforms other currencies, sovereign nations are increasingly searching for alternatives,” Gurbacs said, adding the safe haven narrative hasn’t been disproven because “bitcoin is a relatively young asset and it’s not a full-fledged store of value yet.”

There were, indeed, rumors at the World Economic Forum in January that some nations are actively looking for alternative currencies to settle energy market trades. But such forum participants generally dismissed bitcoin as too nascent, and alternative fiat systems as a poor substitute for the dollar, at least so far. 

“The Russians and Chinese have been trying for years. And failing it seems,” Khedery said.

Regarding the proverbial petrodollar, he added nations “can’t displace [USD] until there is a viable alternative.”

Panic selling

Meanwhile, digital economist Paolo Tasca told Decrypt that the crypto sell off was panic selling, plain and simple. No one really knows how much institutional investors had to do with it, versus Main Street retail investors.

Tasca, founder and executive director of the University College London Centre for Blockchain Technologies, pointed out that in the UK, as elsewhere, people are stocking up at the supermarkets as if preparing for a war. Rationing has been introduced, and anti-bacterial gel is selling on the black market for ten times the price.

“People don’t know what to do and they panic and draw liquidity from the market,” he said. “[Bitcoin is] anti cyclical so it should behave like a safe haven. But in this short period of hysteria, it’s likely that we’ll see a lot of volatility. The volatility index is very high,” he said.

Tasca also pointed out that in many cases, the fortunes of crypto companies are directly related to the same world as traditional finance markets. In other words, they are not islands unto themselves. 

“Hedge funds may want to reduce their exposure to the crypto market, which has higher volatility than the money market,” Tasca said. “In this period, they may prefer the money market rather than crypto market products.”

Tej Parikh, chief economist at the Institute of Directors, the UK’s foremost organization for business leaders and entrepreneurs, agreed.

“The global economic shockwaves caused by the coronavirus outbreak have jolted investors away from volatile equities,” he told Decrypt. “The very real, and uncertain, impacts of the pandemic on households and businesses will most likely see financiers run for traditional safe haven assets like gold and government bonds, while there will be some trepidation over how cryptocurrencies might perform,” he said. 

Edward Cartwright, professor of economics at De Montfort University, in the city of Leicester, UK, doesn’t believe that cryptocurrencies are a safe haven, but he told Decrypt that they may now seem less risky compared to the alternatives.

“If cryptocurrencies are seen as an asset that can insulate from the coronavirus shock, and the almost inevitable slowdown in the world economy, then their price is going to go up,” he said. “If, however, they are seen as avoidable risk at a time of uncertainty their price is going to go down. Evidence suggests that a recession makes investors less willing to take risks. So, I would not be expecting a flight to cryptocurrency. But, equally, I do not see any reason for a dramatic fall in price. “