Would a global recession be beneficial for Bitcoin?

By CCN.com: Some people think in the cryptosphere that a global recession or cataclysmic events will inevitably permeate the population with a sudden desire for cryptocurrency.

To frame that precisely, we need to evaluate the different factors at play. In one respect, for larger financial interests, Bitcoin could certainly offer protection against inflation and lower productivity. Trade imbalances that create uncertainty in national economies could also be offset by the benefits of cryptographic currency trading.

Bitcoin and gold are often viewed the same way, and gold has always performed better during recessions than most commodities. However, there are balances between the two. If Bitcoin follows a similar pattern, it will certainly come out of the next recession in better conditions than those in which it entered.

Decrease in productivity = less disposable income

Yet, one aspect of the equation that is conveniently omitted is that of excess income. If people in all sectors see a reduced demand for skills, the amount of their earnings will inevitably fall. If incomes fall, the surplus money for investment and speculation also declines. The Bitcoin economy is now intimately tied to the traditional economy.

Bitcoin as a "store of value" can not be considered immune to a global recession. Even in nightmarish scenarios where FIAT is essentially worthless, there is no guarantee that people will start accepting Bitcoin instead of the IFJ.

The situation in Venezuela is an interesting case study for cryptocurrencies. One million inflation means that almost everything is better than Bolivar. But it is the best economic health of other countries that gives value to cryptographic alternatives.

If the whole world collapses, Bitcoin will probably do the same

If you subtract that from the equation, what value can they really have in such situations? They are just heavier than barter, requiring education and other standardization methods. Are people with instability beginning to be interested in high volatility alternatives? Stablecoins may experience strong demand, but only as a means of acquiring currency with less friction.

Although the author does not advocate the planned economy, it is certain that Western governments should use their resources wisely. A dazzling debt has created a time bomb. A global recession may, however, create interest for alternative economic models.

The deflationary model of many cryptocurrencies will have a new appeal. Despite this, we must distinguish between a global recession and a global financial crisis.

Thinking experience: 100% inflation for an average holder of 25BTC

Imagine how it goes. Suppose next week your dollar buys you only 50% of the goods it would buy today. In the global bitcoin market, this could lead to a corresponding rise in the price of the BTC / USD markets. Or maybe not.

Of all the questions that people would be attending, crypto-trading would be at the bottom of the list. Let's say that in this scenario you have 25 BTC, and suppose you do not see a matching doubling in the USD value of your crypto.

Suppose you see a 25% to 60% gain in the value of your Bitcoin instead. Do you think you would be the only person to cash it? No market rise is happening like this A tail effect could happen: users would sell their crypto to pay for real needs. This would have no corresponding effect on the rate of inflation. It is much more difficult to retreat than to progress in this department.

So now you have sold some or all of your CTB in order to protect yourself financially. Now your job no longer needs you, so your income goes to zero. It's more your devalued savings and your cryptographic holdings diluted to pay your daily expenses. You end up accepting a job where you earn less in dollars and purchasing power than before. You are not able to redeem Bitcoin. The growth of the institutional and retail markets depends to a large extent on the health of the economy.

Closed-loop crypto-economy could be better

If the global financial crisis manifests again, the crypto-economy is simply not ready to completely subvert it. There are dozens of aspects, from supply issues to adoption by traders, for which we need significant progress to be able to badert that we have a true alternative economy. We have several pieces, pieces that, as a whole, could take a decade or more before they come together to form something that looks like unison.

A simple recession is not likely to drive the price of Bitcoin to an extreme level. The opposite could be true. Anyway, we are not very lucky.

Much of the future of cryptocurrency depends on the development of the community. People who enter the community must necessarily have a certain amount of money that they are really willing to risk. Preferably, these are not people who simply seek to "get rich quickly" because the opposite reality is more common among people with this mentality.

For all the reasons why Bitcoin and cryptocurrency might work well in times of global recession, there are many scenarios for which this is not the case. Nobody can oppose healthy diversification, but if you rely on Bitcoin to get you out of a state nightmare or economic nightmare, you may find yourself in the wrong place.

The recession is "good" for nothing

In summary, a global recession will probably not be beneficial for the macro. Not even deflationary badets like Bitcoin.

The question of how Bitcoin will actually work in the next mbadive recession depends on what we are talking about. People will be more interested in crypto-currencies. They can even transfer badets into cryptocurrency.

But if things go bad enough, it's hard to imagine a mbadive adoption society of Bitcoins. Are we really here? It's hard to say.

Given the thousands of people who have lost a small fortune to Bitcoin, it's hard to say it's a safe haven. Poor economic conditions create increased interest.

A sufficiently large increase could create a situation in which the money enters the cryptosphere and does not leave it. Closed loop cryptographic savings become possible. However, money based on the Internet has a disadvantage: there is never really closing the loop. Part of the market capitalization will always be on other shores. That it comes back is debatable.

In order for cryptos to gain the status of the most wanted money, several elements must be put in place. Things like merchant adoption, usability and relative stability in the cryptography markets.