Global energy markets could impact the future of bitcoin, but not strictly in terms of supply or demand.

On the surface, the current oil market chaos may appear to be a power struggle between Russia and Saudi Arabia, which have differing views on whether to reduce production to accommodate the slowdown or bury the U.S. shale market by making it too expensive to keep up.

“Usually when oil is cheap, the dollar is stronger. But we haven’t seen that in this crisis because of the coronavirus,” said Fadi Aboualfa, managing director of the MEES energy newsletter.

There are rumors of Iranian efforts to use cryptocurrency to circumnavigate sanctions, potentially with deals related to commodities or oil markets. So far, Russia, China and Iran have been among the most proactive nations exploring the cryptocurrency space. Even as a top oil-producing country, Russia has historically been the odd man out of the Organization of the Petroleum Exporting Countries (OPEC), dominated by Saudi Arabia.

These days, among cryptocurrency fans in both Russia and China, the current sentiment is outright defiance.

“Big crypto mining pools are rejecting Iranian miners because of sanctions,” said Mikhael Jerlis, CEO of the Russian EMCD.IO mining pool. “We don’t give a damn about sanctions. If we get sanctioned we’d just shut down the company and open a new one.”

Over the past three years, Saudi Arabia’s oil supply routes have increasingly come under fire. The kingdom’s hold on the shipping routes around Yemen started slipping, thanks to Iran-backed Houthi rebels conquering the most strategic parts of Yemen. It’s no wonder why, as oil markets fluctuate, the crypto-savvy alliance of China, Russia and Iran is growing impatient with U.S. sanctions and petro-dollar allies like Saudi Arabia.

“The dollar has weakened, mostly because China has been selling dollars quite liberally … in order to keep its own currency more or less stable,” said economist Daniel Lacalle. “I think there’s a part of it, in the energy markets, that is related to the tensions between Saudi Arabia and Russia.”

Where bitcoin fits in

When it comes to the prospect of using bitcoin (BTC) instead of U.S. dollars in energy markets, there are many factors beyond banking sanctions.

Compared to energy markets, bitcoin is perhaps the least correlated asset on the global economic chessboard. Bitcoin’s current price of roughly $7,900 is almost double the price at this time last year, despite market slumps sparked by the coronavirus epidemic.

On the other hand, market conditions may complicate the compliance risks associated with bitcoin.

“You could argue they [gold and the dollar] are inversely correlated,” Aboualfa said. “That could be an indication of how bitcoin will be impacted if it’s deemed to be a store-of-value asset class.”

However, he added, most OPEC players view bitcoin as a “sanctions play,” not a store of value.

It’s unclear what role cryptocurrency will play in future markets, as both the least-correlated asset class and a political pawn in the sanctions rivalry. It might raise questions related to compliance on the tangible end of any significant trade, rather than the payment rails themselves.

Meanwhile, from the perspective of an anonymous bitcoin trader in Saudi Arabia, the U.S.-Saudi bloc of this conflict appears to be ignoring cryptocurrency as a tool for global trades.

“Barely anyone is talking about it,” he said of the kingdom these days.

With regards to the oil market rivalry, he added: “Everyone’s on standby to see the impact … it’s about who can hold their breath the longest.”

Meanwhile, energy experts say incumbents are complacent about the dominance of the U.S. dollar in oil markets while others may try to force change.

“China and Russia are already trying to move away from the petro-dollar contracts,” Aboualfa said. “But the U.S. [Navy] could just stop any ship that tries to import Iranian crude. It’s not really a monetary thing.”