What the oil crash means for crypto: The experts weigh in

By Frank Cardona

First everyone in crypto became coronavirus experts. Then stock market and financial policy experts. Now crypto experts are chiming in on the oil crash, where a once thriving and essential commodity turned negative.

Here’s what some experts in crypto have said:

End the War in Iraq?

Anthony Pompliano of Morgan Creek Capital has been loquacious as usual. On Twitter, he asked his audience to ponder whether the US should end the US war in Iraq as oil prices plummeted:

Some people replied with answers like:

Effects on commodities and global trade

Bull Bitcoin’s and Canada’s foremost “Toxic Bitcoin Maximalist,” Francis Pouliot, took aim at his home country about how it could have profited from past oil prices with Bitcoin. Canada’s Western Select Oil (WCS) was trading at -$29.75 at the time of his tweets.

As for other macro effects on commodities and trade, Real Vision’s CEO Raoul Pal continued touting his bullish case for Bitcoin. Pal said he doesn’t see any other way “the dollar doesn’t explode higher and US rates don’t go negative,” meaning deflation for commodities and inflation for the foreign fiat currencies competing against the world’s reserve currency.

Pal speculated that the drop in oil would have catastrophic effects on the prices of corn, soy beans, sugar, and raw industrial materials—a deflationary scenario “where the US farmer is sadly going to be driven to bankruptcy” from high debts and deflation.

https://twitter.com/RaoulGMI/status/1252396843851382786?s=20

Coin Metrics’ Nic Carter posted a chart from the World Bank on Twitter, which ranked countries that rely on fuel exports as a large percentage of their exported merchandise. The list was led by Angola, Brunei, Nigeria, and Azerbaijan, and sprinkled in with some Latin American, African, European, and Middle Eastern countries.

Carter pondered whether these countries could risk “sovereign defaults” from their reliance on oil exports, which could mean the death of their native fiat if they rely on US dollars from oil revenues:

Bloomberg’s Joe Weisenthal summed up what this means for oil exporting countries whose vaults may be low on US dollars:

The effects on Bitcoin mining and Crypto markets

Bull Bitcoin CEO, and Canada’s foremost “toxic Bitcoin maximalist, Francis Pouliot, called to “Make Venezuela Great Again” by mining Bitcoin with their cheap oil and gas.

Pouliot also tweeted a thread at Alberta’s Premier Jason Kenney, the head of province in Canada under major strain as a top oil producer and exporter. In the thread, Pouliot asked the author of The Bitcoin Standard, Saifedean Ammous, to show how government’s “could encourage [Bitcoin] mining to reduce trade deficits in case of Hyperbitcoinization.”

(On a side note, Pouliot also posted a funny video set to Pink Floyd’s song “Money,” showing how Canadians can use their government-granted emergency funds to buy Bitcoin.)

As for Stablecoins, Coin Metrics’ Nic Carter pointed to data which showed the market had eclipsed $9 billion dollars.

In that thread, Carter answered questions from readers about why stablecoins are surging, and what the uses might be. He said that some investors in emerging markets are using stablecoins alone, as opposed to real fiat currencies in banks, for “normal working capital purposes,” meaning for liquidity. Strong fiat currencies such as US dollars and Euros might be difficult to access abroad amid the drop of oil revenues.

He also alluded to how these investors don’t need a traditional on-ramp for stablecoins, but use crypto instead. “You don’t need to redeem a stablecoin with the issuer to use it as money,” he added.

Last month, Carter spoke to Decrypt about how the financial crisis around the world from CoronaVirus, and the world governments’ brrr brrr (money printing), may have caused the stablecoins pump.

Over at crypto data analytics firm Messari—a platform that displays the price movements of oil, the S&P 500, Bitcoin, alongside covid data—founder Ryan Selkis retweeted Pal’s take on commodities dropping with oil and asked how people still don’t think there’s “a major currency failure.”

Oh and “buy bitcoin.”

Nonetheless some Bitcoin critics, aka gold bug Peter Schiff, aren’t so bullish amid the oil crisis:

Other crypto twitter experts also weighed in:

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