Russia reportedly may be among some oil producing nations to ditch the U.S. dollar in crude trade in favor of cryptocurrencies.
Russia, Iran and Venezuela are major oil producing nations dependent on the dollar since the global crude market is traditionally dominated by contracts denominated in U.S. currency.
However, as RT.com explains, all three also face U.S. sanctions; penalties which are proving effective since the sanctioned countries are dependent on the U.S. dollar to sell their crude.
“A decentralized currency – allowing anonymous transactions along with blockchain technology support to facilitate oil contracts – may be the ideal tool to allow the oil producing trio to turn their back on the greenback,” RT.com reported.
To be sure, one analyst told CNBC bitcoin mania could prove to be the flashpoint for some of the world's largest oil producing countries to make a major move against the dollar.
“The advent of cryptocurrencies, therefore, represents a fresh catalyst for commodity-producing countries wishing to abandon the dollar as a means of payment for oil,” said Stephen Brennock, oil analyst at PVM Oil Associates, in a research note seen by CNBC.
Meanwhile, the launch of bitcoin futures fed the market’s cryptocurrency obsession.
Bitcoin futures contracts allow investors to bet on the price of the cryptocurrency in one, two or three months.
"This should bolster the increasing popularity of cryptocurrencies; so much so that they may pose a threat to the role of the U.S. dollar as the world's reserve currency," he warned.
Several oil producers have already voiced plans to ditch the dollar in oil trading. Venezuela also has announced it will launch its own cryptocurrency, the “petro,” which will be backed by the country’s vast natural resource reserves, RT explained.
The one-month contract, the most-traded on the Chicago-based CBOE Global Markets exchange, opened at $15,850 on Sunday night -- a gain of 21 percent.
It was last quoted at $17,500, having earlier traded as high as $18,850, while bitcoin itself hovered at $16,415.36.
Bitcoin has rocketed up a gravity-defying 1,600 percent since the start of the year, attracting institutional interest -- and concerns that it is a bubble in the making, Reuters reported.
“The one-month contract is trading at around an 11 percent premium to the underlying bitcoin, and for me that’s a clear indication that there’s no connection between the two markets,” said Lukas Daalder, chief investment officer at Robeco.
Several online brokerages have not yet allowed trading of the new futures.
“I can understand you don’t see that many people who are willing to offer this contract, because you can’t hedge your underlying risk if you can’t short it,” Daalder added.
(Newsmax wire services contributed to this report).
© 2023 Newsmax Finance. All rights reserved.