Bitcoin Forum

What kind of affect do you think would another global recession or the predicted collapse of the U.S Dollar have on Bitcoin?


Thought it might be an interesting discussion.

It depends!

If it is just a recession that is quickly recovered from, then I don't think anything special will happen with Bitcoin.
If it is a currency collapse recession, which it might well be, then Bitcoin could become a real saviour to the markets.

Imagine if the USD collapses and they need to start afresh.  People won't trust the new currency like they did the old one for quite some time.  In that time people would be more willing to try out alternatives i.e. Bitcoin.
When people start to use bitcoin, they will see the advantages for themselves, then the age of crpto can really begin!

i would say a very low affect, look at the current state of bitcoin, basically there is no evidece of any decline if you don't count willy fake rise, full chart since 2009(where the recession wasn't that big, was actually just started) would look like this:

from 0 to around 200 usd

so the recession didn't make any dent on bitcoin, it's actually raised..

People over the years have lost trust in the current fiat financial system and I'm not surprised that any collapse will actually boost bitcoin popularity even further. When people realize that the value of their fiat holding is decreasing measured in terms of purchasing power, they will start to look for channels to hedge the situation. Gold for one will definitely benefit and this will be an opportunity for bitcoin to gain traction and boost adoption.

it depends on how the average non tech people think about it. if they really think they can benefit from converting their fiat to bitcoin then they surely will. but at this point it's not that easy as the media most of the times is very negative about bitcoin.

In recessions, market panics, and the like, it's clear that people abandon speculative assets and engage in a "flight to safety", regardless of the consequences. This last recession, we saw lots of babies get thrown out with the bath water, and the desire for "safe" assets so strong that US TIPS traded briefly for negative yields. Even after that, many were the willing to lend the US government money for 10 years for less than 2% and 30 years for less than 3%.

So what would happen to Bitcoin?

I know there's lots of hodlers here, but it's starting to touch the mainstream, those you could expect to dump everything and go cash or US debt; people here might disagree, but Bitcoin has yet to show itself as a "safe" asset to sit out dislocations in...

In case of a recession, people will generally prioritize safety.
They would prefer to hold fiat, rather than invest in equities or risky assets like Bitcoin.

Seeing that economic troubles in the US generally cause further problems in general. I think it would be really grim for Bitcoin as well. Bitcoin is still considered a speculative investment right now, meaning most people are investing with spare capital. When the economy tightens, people will first pull that money out of BTC to lessen the losses.

I agree with you.
But I guess the most people would invest into Gold or Silver first.
A few very wealthy people would also invest into alternatives like Bitcoin. The effect on Bitcoin would be noticeable.

I don't think U.S. would allow Dollar to collapse unless it is ready to be replaced with another more global currency like some Amero for expample (like Euro). They have a lot of tricks and armed forces to impose the value on worthless printed paper backed by nothing, not even electricity... And have proved it numerous times...

Unless more merchants accept Bitcoin as an acceptable form of payment, I'd say a recession will likely have minimal impact.

I think developing countries with highly inflated currencies and very low regulation will be the first to readily accept Bitcoin.  There needs to be a high volume of commercial transactions to stabilize the value of Bitcoin.

I agree. Bitcoin is seen as a valuable asset, and could go down with all other assets.

If only the coming debt deflation crisis could wait a few more years, when bitcoin is regarded not as an asset, but as money...

Even if Bitcoin is seen as money, when there is a recession, there will be a flight to safety.
I doubt if Bitcoin will be seen as the safest currency around, even after a few years.

US is a major player in the worlds economy, if they take a hit the world will also take a hit, same with Russia which took a hit recently, but if US would take hit it will rather be a big blow, it will surely drop the price of Bitcoins unless Bitcoins is adopted mainstream and is in a position to overshadow US dollars.

It will be interesting to see if the day ever comes that the rest of the world wakes up and truly understands what trade is about.  The states have been in a trade deficit since 1975, meaning they export more than they import, with the gap being filled by printed USD.  They will likely never be in a trade surplus, meaning this is not really trade.  If the states decline and other countries wake up, then I think they will be positively impacted.  Perhaps they can consume more of the goods they produce, instead of sending it overseas for a printed note.

I think you got the thing with trade surplus backwards.

Another recession means keeping the interest rates lower for longer time - so people would look for alternatives to fiat currencies such as Bitcoin, but honestly I doubt the US is going through another recession - they are aiming for raising the rates which would shift movement towards the USD and not towards Bitcoin.

I don't think many people would flock to bitcoin even if the US dollar was in trouble.  It needs to be a readily acceptable method for payment for it to be treated like a legitimate alternative to the dollar, and it's not that way yet.

If the dollar collapses, people usually go towards physical assets and in particular, precious metals and real estate.

spent electricity isn't really anything of value....

and policymakers in the US are too smart to go for an Amero type thing... Alex Jones and other conspiracy nuts aside, letting a group of countries dictate US monetary policy is not something the govt would ever go for. Rightfully so, I think, looking to things like greece and cyprus...

but many will go to bitcoin in this case, and will increase the adoption which will start a series of events that will increase even further the adoption, so the collapsing of the dollar is for sure beneficial for bitcoin

For that "many" to go to Bitcoin they need to know how to use it and be sure about it, which that is still only a small member of geeks compared to the mass of average joe and the rest of the sheeple, if this wasnt' the case Bitcoin usage would be sky rocketing in Greece as we speak, but people is too clueless yet.

Yeah, it basically needs to be as easy to use as a debit card and almost as widely accepted.  Anything more complicated than that won't get the entire mainstream crowd.  Then the unit of value needs to be understood for pricing.  Most people have trouble converting currencies in their head to understand pricing, and bitcoin is definitely more difficult as it goes into decimal places.