Bitcoin Forum

I always assumed that an economic downturn with high inflation would lead to lower confidence in fiat currencies, causing people to run to more reliable stores of value. Traditionally these are precious metals, but crypto currencies could also serve this purpose. This flow of fiat money into crypto, would cause a bullrun with higher crypto prices. That was my idea of it.

But why do legendary investors like Michael Burry predict that we are not at the end of the bear market yet, because of a looming economic recession/depression?

Turkey and Argentina are 2 textbook examples of countries with enormous inflation. In these countries, there is demand for a stable currency.

https://www.dw.com/en/turkey-witnesses-bitcoin-frenzy-amid-economic-turmoil/a-61786507

https://www.bbc.com/news/business-60912789

So the increased demand for crypto is something I am right about.
I just don't see how this doesn't lead to a higher price of the coins.

I think there's the fact it's still emerging, and considered new and risky. This'll probably be the case until its widely accepted and widely used in places (it doesn't have to be done everywhere but as soon as it's done in a city and shows proof it'll keep them stable we'll see this happening).

By accepted I don't necessarily mean it has to be used as a means of payment for goods but could be stored or used in other ways.

The people saying we're going to be in a bear market for a few years are using the past to attempt to determine what's going to happen next (and are also perhaps hoping for the past to repeat itself because it's much easier to trade when you know what's going to happen).

It's because if people are having troubles paying for their daily needs, the last thing they'd want to do is to speculate in volatile cryptocurrencies. Bitcoin being very dominant in a inflationary environment will likely happen in my opinion, but most probably not right now.

I could make an argument that when people struggle to pay for their daily needs in fiat currency, there is no fiat currency left to invest in cryptos.
I have not invested in any crypto yet, because I believe(d) that banks and governments will simply not allow transactions from crypto to fiat when crypto gets too big.

In 1971, president Nixon forbid the exchange from dollars to gold "in order to protect the dollar".
By the same token I expect governments to prevent exchanges from crypto to currency in the near future.

And when you can not pay for your gas and groceries in bitcoin, and you can't convert your bitcoin to fiat currency, I believe that this is extremely bearish.

Nothing is completely safely so don't add all eggs (all your capital) into one asset, even how much do you love and believe in Bitcoin.

Honestly, I believe Bitcoin is a great asset against inflation but it is only true in long term. If you can not hold your Bitcoin till next halvings, and have to sell it in any bear market, you will not have happy exits or happy endings.

Global economic recession is massive and sure it might affect all markets exclusively Bitcoin and crypto market.

Op, I think that purely logically, you're right. In times of uncertainty, people should be looking into something more certain, into a way of saving their wealth if it is very likely to suffer heavily from the global economic recession. Perhaps the problem is that Bitcoin is NOT stable. If a person doesn't have faith that Bitcoin will recover again, the losses with Bitcoin can be higher than from fiat inflation. Also, stability is something more associated with gold, the price of which remains quite stable. Bitcoin requires taking a risk for the sake of potential profits, and maybe priority in uncertain times is not a risky decision but something relatively certain.

Such a law would be hard to accomplish, I imagine it was back then. There'd then be enouch ways to exchange crypto to currency if that happened or to assets once crypto wasn't allowed to flourish in some areas. I don't think there's one market with significant influence on bitcoin though, I think that's been decentralised a bit too recently (US companies might be the largest public buyers, but even then they don't seem to have that much influence on the price from there when they claim they've bought or sold).

I don't know if areas like Europe will follow the US on such a ban too, there's a chance but there's also something they could gain by watching the US banning it and keeping hedge funds and other companies happier by keeping it (there's already a much less regulated derivatives market in Europe too).

It should be bullish. The problem is not all of the people who buy bitcoin do it with their own money. Some take loans to invest or have taken loans to buy other things like stocks or real estate and are now getting destroyed by rising interest rates. These people had to sell bitcoin to pay their loans up and stop losing money to the banks. There's also a group of investors who trade bitcoin by predicting cycles. When bitcoin loses about 50% they sell everything because it could mean a prolonged bear market. To them the economy isn't important. What is important is if bitcoin is in a bull or bear market.

The good part is those people are out by now so what's left is the mostly normal investor, a person who held in 2018 and is not easily scared.


Burry is a permabear. He was bearish in 2019, 2020, 2021 and he's bearish now.
Also, he's impatient. In 2020 he sold all his gamestop stock right before it exploded in 2021. It's estimated that holding the stock for another 6 months would've made him 1 billion USD.

This can not be the case for every country, you made an example of the US president Nixon back in '71 and that was Gold and not crypto, there is a risk regardless of which investment but I doubt if that was the same for other locations and let's not forget that there are Governments that have actually embraced Bitcoin as it is now and in locations where this type of situation is already happening, crypto investors have always found a way out like P2P but this is not to say we shouldn't look at other forms of Investing. 

I am positive on this note too but I am not sure things will pan out the same way for crypto currencies. On happy scale crypto is still premature in the eyes of government and world wide summits. They still think printing more money could be better option and imposing this rule and that rule would be far better.

That being said it could happen they will try to banish the whole crypto space so that the money invested in it will be sold off and all the money starts rotating in the bank to bank. The recession is inevitable, it’s gonna happen because that’s the position we have created for ourselves with pandemic outbreaks, stimulus giveaways and wars!

that's also my thought that the recent bad economic problems from inflation and rising interest rates or the russia war, should increase people's trust in bitcoin or other cryptocurrencies to be a means of payment or investment, but sometimes not many countries legalize bitcoin as a tool payment, bitcoin should be an alternative to get out of a situation like this, wasn't the economic crisis in 2008 that made satoshi also created this bitcoin as an alternative solution to this situation

It is because that there's more to come. The debt of US is in trillion and now, the Saudi Arabia market for oil has increased its price for them while in the other markets like EU, it was decreased and in Asia, it's retained.

And that's for the hope that will make the markets down as they'll have a more expensive gas prices because they've been the source of the inflation rate for most countries.

We don't know what's on it, but we'll see more from it.

By the way, this topic is for Economics (https://bitcointalk.org/index.php?board=7.0) board not in Bitcoin Discussion.

Bitcoin will see increased prices as soon as we start recovering from the recession. Others have touched upon it, but during the very start of a recession, everyone is filled with panic, and due to the drastic changes are usually worried about putting food on the table, let alone investing in a newish cryptocurrency.

So, basically buying power goes down, which results in less coins being moved. Exactly what happens with fiat systems when the market crashes. People don't have the money or the will to spend their money, which results in businesses feeling the pinch. It ultimately takes time, and adjustments by the people, and governments to mitigate the effects. Once we start to recover from the recession a little bit, that's when people have more buying power, and are coping with the recession. Not only that, they'll look to alternatives since they've just lost a lot of money being invested in a fiat system, which is the direct cause for them losing their money.

So, when the market starts recovering, we'll see increased buying, which in turn should increase prices.

And Bitcoin is not a stable currency, it tends to have these long bear market or just drop down by 5-10% in a minute without a clear reason why it should do it. People don't want to risk that, and they do have options for storing their wealth in something better than their domestic currency - they use US dollar, Euro, gold, stocks, bonds. Bitcoin is high risk, high reward - and high risk is not what you want to use to store all your wealth in.

In my opinion, as a beginner in bitcoin and crypto, the price of bitcoin and crypto does not have a high price increase, or can it be called a bull run, even though there are more and more buyers? according to the cause, that is, because most of them who invest not for the long term but they invest for the short term, so the price of bitcoin and crypto will not soar or be called a bull run, because it is caused by those who buy a lot and those who sell also a lot, so the price of bitcoin and crypto will not soar very high because of such causes, and because the economy is down then many people are forced to sell their investment assets.

In my own opinion, at its initial stage of an official global recession, cryptocurrencies would be following the lead of other investment assets but as time goes on the market can see that it can be the best alternative hence there can be a growing interest maybe in the middle of the recession cycle. Of course, with cryptocurrency anything can happen so it would just be better to be hoping for the best and yet preparing for the worst.

Two years of this crisis already made a lot of people go hungry and struggle from paycheck to paycheck. The last thing they have in mind is to buy some metal stocks or crypto when they know its price is not growing. They'd think of what is going on right now and they would prefer to buy bread. The bearish market will continue to be bear even on crypto. Unless the US starts lowering the interest rates, it may turn bullish.

If there are people who are investing these days, they are the ones who have tons of money and probably benefitting from the covid crisis.

This is the right mindset, bitcoin will in the long run remain the inflation-resistant asset as it was originally designed. The current short-term decline can be understood simply because most of the investors in the market are speculators, so depending on the market situation they will invest in to make a profit. Currently, both gold and crypto are bearish and only the USD is the strongest, so other assets dumping is understandable. People are just speculating for short term profit, in the long term, I believe a lot of people choose bitcoin and gold as safe haven.

I guess people just don't want to invest any because of what is going on in the world. But if you look closely, it's a wrong mindset, because crypto specially bitcoin could be a good hedge, as our purchasing fall, might be good to look for assets that will help reduce that risk. And this recession could take years, so it's good to start now and go buy bitcoin, just saying, specially for long term. And this separate smart investors from those newbies who just know what investment is,  however, there action is very different.

You should know that confidence itself is not enough. Nobody can live with confidence but without money. So in recession, people have to care more about their finance, their pocket, their daily expenses and bills. Hence they will be more hesitating with investment, not only investment into cryptocurrency.

Fortunately, if you don't have issue with your finance, it's very great time for you to DCA your favorite cryptocurrency and wait for a next bull run.

Firstly, you should not trust all statements from celebrities, influencers without question "Why?". You must ask yourself whether their statement based on any solid analytics or just is spoken arbitrarily and emotionally.

Second, I partially agree that the world economic is in a really bad phase that needs years to recover. It won't recover after one or two years.

An economic recession is a condition where economic activity are declining since people doesn't have enough money, also it's followed with inflation too. For most people who only have money to spend on their daily life will be hard to face economic recession since they might can't fulfill their daily need and could ask a loan if the situation is really hard. Does they have any money left for emergency purpose or investment? No.

If they're educated enough and want to invest, they will invest before economic recession, not wait the economic recession happen.

I believe it will recover but I also believe that governments will deny the conversion of crypto to currency.
I also believe that governments will not allow citizens to be paid in a currency that they can not manipulate. Such as a gold backed currency or crypto.
So in the end I wonder what BTC can be used for, if you can't pay for gas and groceries. For a mortgage and other things government can control.
I think BTC will only be useful for payments on the internet, where the government has no control.

In an ideal world, we would all get paid our monthly wages in bitcoin. Because it is a hedge vs inflation.
Central banks would not exist, so they can not manipulate our purchasing power by inflating the money supply.
But this is exactly the point. Inflating the money supply gives them a tremendous amount of control over people.
This is what they want, and they will not give it up.

We should all stand up against central banks. But for this to happen, people should understand the monetary system and 99% of people don't.

I agree with you that the demand for crypto currencies is rising during times of high inflation, but a recession is working against that pressure. A global recession we are facing now creates a lot of uncertainty for investors. First of all we don't know how save our jobs are, maybe companies need to lay off workers and we will be part of the layoff. This fear makes planning future investments very difficult and investors are reluctant to add on new trades. In my country the situation is very paradox, most of the big asset managers recommend to not invest right now and hold cash instead, but with inflation rates at 10% it makes no sense at all to hold cash. It's only a matter of time before more investors start buying crypto currencies again.

When the economic recession starts everything comes to constrict. Because everything in the world is related to money. When you don't have money you won't be interested in buying anything even if you need it. Because the financial crisis will increase. At that time only basic human needs are given highest priority. Actually when you have enough money supply will you consider different investments. In that case, cryptocurrencies will be no different. There all kinds of investors big or small will convert or spend their money. As a result, the market condition will worsen. The market will move towards a long bearish.

When recession happens many prioritize more their living needs than their investments. It’s about making your present comfortable than risking in the market which might experience downtrends since people might lose jobs while goods are having inflations that makes living more hard when you only have few money on hand and didn’t have any savings. At this saving goods and having emergency funds is more better than trading it unless we’re too rich that we can take advantage recession to buy low and sell once the market recover and crisis is over.

My opinion that government has indirect control over inflation is significantly more common in periods of recession, Belief in the existence of fiscal policy drives expectations of better economic times even if certain recessions last longer than expected.

For someone with no knowledge of finance, stocks, bonds and other aspects of the market it can be very confusing and further complicated by the current state of affairs and all the differences. This is one of the most complex and confusing things that most people will ever encounter.

You can use it as an asset if not for payment because of government policies and regulations in your location.
Right now it is not news that btc has not actually gain that level of acceptance where you can easily make payments with it at every store, there are still a lot of limitations when it comes to payments, except you find yourself in a btc legalized country like El-Salvador.

There are several online stores that accept btc but the only drawback is..... you may not find variety of option. For example, you want to shop for groceries online, am not sure if there is online site that sells groceries and accept btc.

Regarding your point, I believe the market will be higher at the end of the year than it is now. Corporate profits will continue to rise, and I do not believe Russia-Ukraine will be a significant long-term issue for the market.

I believe the market prices many things in, but it also significantly overcorrects, both upward and downward.

Yes you are absolutely right. When I have money, I have a different kind of peace in my mind. When I don't have any money, I am very stressed. When I have money, I like to invest most of the time.  And don't invest if you don't have money. But I think if you have money you can get everything.

Money is something that was created out of thing air. Back in the day it was gold coins, so it had some worth, and afterwards it was paper but backed by gold, nowadays it's neither, so it’s free to print and has absolutely no worth other than what a nation says it would, or investors does. Which means we are stressing ourselves for something that doesn't even exist in any meaningful level.

This is why I like bitcoin, it is backed by the same people who are supporting fiat, if we start to say bitcoin doesn't worth anything, we can do that for fiat too and nothing could stop us, no government neither, it has been done in Zimbabwe or Venezuela before, the whole world could decide a fiat is not worth anything anymore as much as they can say it for bitcoin.

There are tendencies investors are needing money to survive their daily living, and that gives them an option to withdraw their assets triggering a bearish trend in this industry. Possible right?
This is indeed another factor to consider wherein crypto enthusiasts does not have enough resources to continue their investment routines given that there is an economic crises to many countries around the globe.

Simply because there are people in this industry who are making profit out of it which causes the stress from the situation we are currently experiencing. It would be nothing to all of us if we don't benefit from it.

Why should you be forced to sell Bitcoin in conditions like now? even though you should still have to survive in conditions like now without having to sell existing Bitcoin holdings. If in conditions like now you really need money and don't know where to look, then obviously selling the Bitcoin you already have is the first option you should do, but in this case I don't think you need money urgently.

So I advise you to keep your Bitcoins and don't sell them at low prices if the need for money in life is not urgent for you personally. Because you also have to have the belief that Bitcoin still has the potential and future to increase more and will never die and become bad if the number of enthusiasts continues to grow and is still around the world.

So you think that cryptocurrencies are more stable than fiat money? Really? It's a historical fact that cryptocurrencies are more volatile than the fiat money. The people in Turkey and Argentina could simply buy US dollars. The US dollar is relatively stable right now. Why would they buy crypto, since almost no merchants and businesses in their countries accept crypto payments for goods and services?
In times of recession/depression almost all traders/investors are running away from the risky assets(like crypto) and moving their money to safe heavens like precious metals and real estate. Bitcoin isn't considered a safe heaven.

The thing is as simple as that the flow of money into cryptocurrencies occurs en masse when there is a lot of money available, and when there is less money available, the flow is reduced. What central bank policies have done is to reduce the money available, and this has affected the overall economy. Bitcoin has been no exception.

The behaviour has been the reverse. Instead of spending fiat money to buy bitcoin or something else when there is less money available, because there is less money available, what people value most now is liquid money, cash, even if it is in electronic form. So what they do is sell assets to get cash: houses, shares, cryptocurrencies.

In this, the many naïve retail investors have ended up doing the opposite of what they should. They bought in the bull run, with money that at the time perhaps they didn't really need, but now with the crisis they do need it and end up selling at a loss and perhaps due to panic, instead of someone with a healthy economy who takes advantage of the cheapness to buy more. Not to mention those who went into debt to buy cryptocurrencies, following some of the gurus that appear on Youtube.

It was because they needed money to buy their necessities and exchange their assets for fiat, it would make it easier for them if they were in an urgent situation. But some of them will probably keep working from many places to collect more money.

Maybe in a recession, some people will keep their fiat in other forms and with crypto, they can switch to crypto by buying more assets and keeping them until the bull market comes. But each person will have their own plan for dealing with this global recession so they will surely be able to find a solution.

The recession setbacks of 1998 & 2008 had a lot to do with the surprising decline in home values. The housing market hasn't fully recovered from that dramatic downturn, but economists are so convinced of our imminent economic crash that he's put his money in its place.

There is a strong correlation between the amount of debt the average person has and the chances of becoming a millionaire. I'm not saying this to scare or pressure anyone into selling their Assets and moving into the van. The correlation exists, but that doesn't mean that it will be true in the future. As much as people say that there is enough money with all these things combined, it is actually something completely different and there are always some obstacles that go against the same goal.

It's like we've just had a baby boomer bubble, a really big one and we really need something to replace it. Credit rating agencies will be under heavy pressure as the first credit bubble burst and created the current financial mess.

I don't see any connection at all. If trust in fiat is falling, how can people trust something like cryptocurrency, which has an even more dubious reputation and unstable state? It doesn't make sense, absolutely.

That's it, currently goods and services are increasing in price which means a lot of
disposable income is being used up so the demand for investing is reduced.

In some cases investments will be liquidated or part liquidated in order to cover
increasing costs, and in alot of cases wealth will be moved into recession proof
areas like property.

Unfortunately Bitcoin currently is not being realised as being recession proof,
It will take time for more people to realise this.

Everything would really be that on domino effect which its something that cant really be ignored upon.Even though we do know that crypto market is independent from outside events or news
but still when it comes to economic recessions which do mainly affects investors mindset then it is really that normal on having these kind of circumstances or actions on what they would be making.
We are all bears, not only on crypto but also in other markets as well which do justifies out that we are really that on a state where everything is on negative.
Chasing up opportunities? It wont be that easy because doubts and fear would really be there.

That's also what some of us assume but what if you guys are wrong? But what actually happens is that people in cryptos are also panicking and selling their assets, that is why when there are economic problems the dump in crypto market is also getting worse. They think crypto markets are going to be affected badly bad they didn't know that it was their actions are the ones which affected the price.

If only they didn't panic sell, the cryptos are going to be stable or maybe experience some increase because there are some who will put their money on it for a while until the inflation subsides and until other economic problems are solved.