Would a global economic crisis negatively impact or promote Bitcoin?

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Important facts:
  • The crisis of the spread of the coronavirus paints a contraction picture for 2020.

  • The International Monetary Fund (IMF) estimates a decline of at least 3%.

The world is in an unprecedented situation that connects several economic, political or health issues that are connected in one way or another and could theoretically trigger a global economic recession in 2020.

On the one hand, there is the coronavirus pandemic and the widespread quarantines that leave semi-paralyzed economies. On the other hand, commodities in the markets have rarely declined due to lower demand, which has resulted in “collateral damage” such as the closure of companies, the decline in employment, air restrictions, government-to-government reporting and even cancellation. sporting or cultural events.

The International Monetary Fund (IMF) is already expecting a historic global economic crisis and predicts that the total stumbling block will be 3%Regions like Europe, Latin America and the USA fell 7.5%, 5.2% and 5.9%, respectively.

The International Monetary Fund expects the world’s major economies to decline by 6.1% by 2020. Source: IMF.

If the global economy drops significantly, as expected, the question arises as to how this situation would affect Bitcoin. Would it increase its price or negatively affect it? Would it stay the same? To understand this scenario, CryptoNews has consulted various specialists who describe how the major cryptocurrency might respond to its first major global crisis after it was created in 2009.

For the market analyst and Dealer Venezuelan Alberto Cárdenas is one of the most important debates around Bitcoin The financial crisis is just beginning, but is expected to last for several months. The operator is of the opinion that the first cryptocurrency is exposed to a litmus test. However, he does not believe that his price will rise in a global economic crisis.

I don’t see Bitcoin with an exploding or rising price, I can’t imagine it. It wouldn’t be logical because it wouldn’t have a correlation with the economic fact and ultimately Bitcoin shouldn’t be without that correlation with the planet’s economic reality. If that happens there would be a feeling of manipulation and I think it would affect credibility if that is the result.

Alberto Cárdenas, market analyst and trader.

The Dealer He explained that Bitcoin is showing very good resilience at the moment, but we have to wait and see how it reacts when the worst phase of the recession occurs, i.e. when the number of unemployed increases, when money is on the road or when consumption decreases decreases more.

“In my opinion, the price will fall like the rest of the assets, but it will likely perform better than other assets. In addition, it has to be taken into account that Bitcoin can shine again in the event of an economic recovery, “added the specialist, who recalled that the cryptocurrency has mixed properties because it can be viewed as digital money, as a raw material,” because it is mined »Or viewed as a valuable asset.

Bitcoin and the global economy

After 11 years since its inception, Bitcoin has been talked about almost everywhere in the world. Each country has more or less related to the cryptocurrency or its political, economic, or social impact. For many, Bitcoin is considered a global phenomenon, and because of this, it is not separate from the reality the world is facing today.

At least that’s the way it is Dealer Mexican @ cryptohispano01, who stated that contrary to what happened in the early years of Bitcoin development, the Cryptocurrency is not the same as its beginnings as it now has a dose of regulation and institutional capital.

Bitcoin is no longer the same as before, it is now an asset financed by institutional funds and more regulated parties. This has made it more connected to the global economy. It is true that it is a real asset and not a debt like fiat money. However, since it is listed on the CME (Chicago Mercantile Exchange) and other regulated markets, it becomes one WouldTherefore, the effects of a global economy will also be reflected in the Bitcoin price.

@ cryptohispano01, trader.

@ Cryptohispano01’s thesis is that BTC will also do poorly if the global economy does poorly. When asked about the origins of Bitcoin, which was born after the 2008 financial crisis to face a possible global economic crisis in the future, the operator emphasized that Bitcoin originally served this way, but that miners have now become institutionalized as well as the big investors that were previously common and current.

Bitcoin-cryptocurrencies-currencies-banks-euro
In the year of Bitcoin’s third halving, the cryptocurrency experienced its first major financial crisis since its inception in 2009. Source: MichaelWuensch / pixabay.com

Another point of view is that of the economist and Bitcoiner Venezuelan Daniel Arráez, who told CryptoNews that Bitcoin does not follow the established patterns in today’s world and would not be affected by what could happen to the possible global economic recession.

Arráez is convinced that this type of situation will favor those who own Bitcoinbefore those who have dollars or some other asset benefit to protect themselves from what is happening.

«I’m from the current who thinks Bitcoin is indifferent to the crisis or world boom scenarios. We have to remember that Bitcoin emerged from the recent financial crisis as an alternative to central bank money, bank bailouts and not people, “said the economist.

In terms of your personal experience as Bitcoiner He stressed that he feels calmer when he knows that he has Bitcoin as a receipt instead of dollars or other assets.

Bitcoin, with its properties of scarcity and temporality, was developed with the aim of maintaining the property of value protection. When I first got to know Bitcoin, the price was between three and seven dollars. Seven and a half years later, time confirms this as a store of value.

Daniel Arráez, economist.

Capital to invest in bitcoin

After the March 12 downturn, when Bitcoin lost more than 40% of its price, the cryptocurrency has recovered. According to experts, however, the global economic crisis is just taking its first steps, so that the darkest part of the tunnel has not yet appeared.

Bitcoin is an asset based on supply and demand and, like any other asset, is subject to price fluctuations. The more people buy it, the higher the price, the more people sell it, the lower the price. To participate in this cycle, money is required, which the EU says could be scarce Dealer Spanish @immortalcrypto.

The cryptocurrency trader supports the theory that Bitcoin is going well when the economy is going well, but in a dead end like that of Bitcoin would have no direct benefit in the global economic crisis.

If there is a good economy, people can invest in assets like Bitcoin. When a family is doing well, other decisions can be made instead of just having the money to pay the bills. If the economy is going well, you don’t have to do these calculations, you still have money left at the end of the month and can consider other types of things to invest in.

@immortalcrypto, trader.

@immortalcrypto sticks to the thesis that there has to be a high level of shopping for there to be an upward trend in Bitcoin. For Spanish a A sustained crisis would be very difficult for Bitcoin as the likelihood of an uptrend will decrease.

If I have to choose between two situations for Bitcoin to work well, I prefer one where the economic situation is good, because if people have a surplus, they can invest it in Bitcoin. If there is no buying pressure, if there is no demand, the price cannot rise. In a global economic crisis, most people won’t want to buy Bitcoin, they just want to pay the bills.

@immortalcrypto, trader.

Although it would take a few more months to overcome the impending recession in the global economy, Bitcoin is trading at around $ 8,700 per unit, according to the Crypto News Index. A higher price than when the World Health Organization (WHO) had a global coronavirus pandemic.

So far, Bitcoin has flirted several times with the $ 10,000 mark in 2020. On February 19, it reached its all-time high this year at $ 10,320 per unit. Source: Coingecko.

Just like in the past, when Bitcoin experienced capital losses, the cryptocurrency knew how to recover from tough times. If such an episode recurs, there is nothing to suggest that it cannot be overcome and shows that it would be ready to include dark scenarios like that of Satoshi Nakamoto.



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