The current oil price shock has thrown into question the correlation between crude and Bitcoin, showing that the digital asset moves independently of the commodity, a new study from Binance has found.
Based on 10 years of weekly data, Bitcoin and crude oil returns are "statistically independent processes", showing that no stable return-level relationship exists between them, the world's biggest cryptocurrency exchange by volume said.
Their "correlation coefficient is indistinguishable from zero", Binance Research analysts said.
"The only significant positive correlation occurred between 2020 and 2022, during a period of unprecedented monetary expansion when risk assets moved in tandem due to a shared global liquidity factor," they said.
The current Strait of Hormuz crisis, they noted, provided a "particularly relevant test" of this independence.
Case study
Between February 23 and March 18, Brent leapt by more than 46 per cent, in one of the sharpest short-term energy shocks in recent history. Over the same period, Bitcoin gained 15 per cent, outperforming both the Nasdaq Composite and safe-haven gold.
Its price action followed a three-phase pattern: an initial dip, a period of shock absorption and ultimately an independent rally that saw Bitcoin go from $66,000 to $75,000, as crude steadily rose, Binance said.
The research showed that institutional capital was the "decisive factor", and investors should focus on crypto-native indicators such as exchange-traded fund flows, long-term holder accumulation and stablecoin liquidity.
"Three independent demand channels – ETF flows, US spot market buying and corporate accumulation – collectively absorbed the macro shock and drove the subsequent rally," the analysts said.
“Incorporating oil as a key variable in Bitcoin investment models is not supported by the evidence ... that said, this independence may shift under extreme conditions, such as a global liquidity crisis or aggressive monetary tightening,"
However, analysts suggest that there are, indeed, notable oil-related factors influencing Bitcoin's direction.
Recent trends
Bitcoin hit a peak of more than $126,000 last October on the approval of spot exchange traded funds and wider institutional adoption, capping off an impressive two-year bull run. Before that, then presidential candidate Donald Trump hyped it up during his campaign in the 2024 US elections.
Since that peak, however, Bitcoin has significantly cooled off: as of Saturday, it was trading at just below $67,000, practically half of what it was half a year ago, data from CoinMarketCap shows.
During that stretch, it hit a low of about $62,700 in early February – nearly days after the US-Iran war started – mostly due to profit-taking and investors shying away from risky assets.
The conflict in the Middle East caused Bitcoin's upwards momentum to fade, said Axel Rudolph, a market analyst at Dubai-based trading platform IG.
"Traders who had accumulated positions during the recovery used the strength to take profits, slowing the advance and signalling that conviction at higher levels remained limited," he said.
Data shows that, during the crisis resulting from the Strait of Hormuz's closure, Bitcoin declined 3 per cent for three days, then rallied 15 per cent, as Brent oil spiked 46 per cent.
Meanwhile, when the Russia-Ukraine war broke out in February 2022, when oil prices also jumped, Bitcoin actually rose.
This points to Binance's study, which said oil shocks amplify short-term volatility, but not direction.
"Geopolitical oil price events are more likely to create allocation entry points than sustained risk events under the current institutionally-anchored market structure," it said.
"Oil price is not a valid Bitcoin risk factor for [investor] portfolio optimisation ... it is generally not advisable to adjust Bitcoin positions solely based on oil price forecasts or geopolitical energy supply scenarios, as a decade of data offers limited support for using oil as a tactical signal for Bitcoin positioning."
'Brutal reality check'
However, oil is a primary driver of inflation, which ultimately influences central bank behaviour and how much capital is available to flow into risk-on assets, said Eneko Knorr, founder and chief executive of Hong Kong-based financial services firm Stabolut.
Therefore, "yes, crypto investors must absolutely factor oil prices into their market analysis," he told The National.
"Ignoring energy markets right now means ignoring the root catalyst for the macroeconomic trends that heavily dictate the short to medium-term price action of digital currencies."
On a broader context, since 2017, Bitcoin has recorded declines of at least 25 per cent on more than 10 occasions, at least six drops of more than 50 per cent and three retreats of more than 75 per cent, analysis from industry tracker the Kobeissi Letter has shown.
I "completely agree that major conflicts trigger sharp, short-term volatility without damaging the long-term outlook, but I believe it is time for a brutal reality check," Mr Knorr said.
"Right now, Bitcoin has failed us as a 'safe haven' and a store of value during times of profound uncertainty; instead, it behaves exactly like a high-growth tech stock that investors dump for cash at the first sign of global panic."
'Long and unreliable'
Jesus Perez, founder of Madrid-based research firm CryptoPlaza, agrees with Binance: oil and Bitcoin move "essentially independently", with no meaningful and stable correlation.
If there is any link, it's indirect and at the level: oil price shocks can feed into inflation expectations, which influence central bank policy, which affects global liquidity – and liquidity is what really drives Bitcoin.
"But that transmission chain is long, slow and unreliable as a trading signal. Oil doesn't set Bitcoin's trend; at most, it can temporarily amplify volatility," he told The National.
While Mr Perez concedes that ETF flows, halving cycles, regulatory developments and on-chain adoption metrics remain the fundamental drivers of Bitcoin, but he does not fully dismiss the oil factor.
"Oil should "not [be taken] as a direct signal ... a supply-driven oil spike [like a geopolitical conflict] typically signals inflation risk, which could lead to tighter monetary policy – a headwind for all risk assets, including crypto," he said.
"Conversely, demand-driven oil strength suggests a healthy economy and risk-on sentiment, which tends to be positive for Bitcoin. The key insight: monitor oil for what it tells you about the macro environment, not for what it tells you about Bitcoin directly."
Still, Binance acknowledges that any prolonged disruption in the Strait of Hormuz – a sentiment widely felt – Bitcoin may not be spared.
"A prolonged shutdown lasting more than three to six months could drive non-linear energy price escalation, significantly alter inflation expectations and elevate stagflation and recession risks to levels that force broad institutional de-risking across all asset classes," their analysts said.
"In this scenario, Bitcoin would not be immune – but the transmission mechanism would be 'universal risk-off deleveraging', rather than oil directly impacting Bitcoin."
