Bitcoin Forum

Things are pretty rough for the global financial markets at the moment. So much so that economists are speculating that we’re about to go into a recession. Recession affects all of us, but for those that hold Bitcoin or other cryptocurrencies, things might feel a little more uncertain. Why? Well, we haven’t really seen a global recession since the rise of cryptocurrencies. With that being said, the invention of Bitcoin was in a sense a response to the global financial crisis in 2008. Satoshi Nakamoto himself cited bank bailouts and centralized financial institutions as reasons for the creation of Bitcoin. So, what would happen to Bitcoin if the world had to go into recession? We have some ideas.
 
What Exactly Is A Recession?

I’m sure we all remember the global financial crisis that occurred in 2008, but what exactly is a recession and what causes it?

There are so many different factors that can cause a recession: political instability, climate change, war – the list goes on. However, a recession is recognized as a period of temporary economic decline (the keyword here is “temporary”), categorized by a fall in GDP in two successive quarters. Recessions are terrible for the global economy and hit us all hard.

https://www.youtube.com/watch?v=eb9ti035QRw


How Will Bitcoin Be Affected By A Recession?


When it comes to how Bitcoin will be affected by a recession, there are really two possible scenarios: Either Bitcoin thrives or it takes an incredibly hard hit – what will actually happen remains to be seen.
The case for a thriving Bitcoin market during a recession: Underperforming fiat financial markets could fuel Bitcoin adoption.

In countries with high inflation, such as Venezuela and Zimbabwe, Bitcoin (BTC) is trading at a premium of 40%. High inflation rates make fiat investments less valuable and less stable, driving investors away. While Bitcoin is influenced by global markets to some degree, it has been called the “digital gold standard” making it a safer investment financially, and more secure. Bitcoin is also recognized worldwide and relies on no external, single authority.

Inflation will naturally rise during a global recession, making investing in traditional fiat investments both more expensive and less stable. This could very well work in Bitcoin’s favor, as more people will consider moving their investments into cryptocurrency.

On the other hand, a recession may cause the USD to reemerge as a global currency, rather than crypto. During a recession, the 99% are forced to cut spending, and focus on survival – job cuts and pay cuts make things even more difficult, and most working to middle-class people will need their fiat currency to survive rather than purchase Bitcoin and other cryptocurrencies. You could even see people who hold massive quantities of Bitcoin (BTC) suddenly offloading, weakening the value of BTC and driving down demand.

https://www.youtube.com/watch?v=Rq25M3Z_9jI


What Would Happen To Bitcoin If The World Had To Go Into Recession?


So, what would happen to Bitcoin if the world had to go into recession? There really are two equally possible options to be discussed here. Either Bitcoin (BTC) thrives as the new gold standard during a recession or the USD emerges as the global currency and Bitcoin takes a massive hit.

Bitcoin (BTC) was invented to combat so many of the issues that we face with the current fiat financial system, but we’re still very much in the early stages of Bitcoin adoption (even if it doesn’t feel that way) so we can’t be sure how it will respond to a global recession. Whatever the case, Bitcoin still has a long journey ahead of it.

https://twitter.com/HayesBrown/status/1161736006191783939?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1161736006191783939&ref_url=https%3A%2F%2Fuproxx.com%2Fviral%2Frecession-2019-twitter-reactions%2F

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https://kryptomoney.com/what-would-happen-to-bitcoin-if-the-world-had-to-go-into-recession/

Another way to say it is nobody knows what can happen to Bitcoin if there will be global recession affecting all economies and countries. Will there be a big demand for Bitcoin under a very uncertain climate or will Bitcoin also suffer a significant slowdown as people are losing confidence on the market? This is something we will find out if the feared another round of recession can affect us all. The last recession around 2008 was one of the biggest reasons for the eventual birth of Bitcoin and the popularization of the blockchain technology...will the next round make Bitcoin shines through or will it partly kill it? Some are saying that like the real gold, Bitcoin's value will rise under this situation because people will be seeing Bitcoin more trustworthy and invest-worthy than the traditional fiat money and assets. Again, that is something we can experience once the recession is back roaring its ugly head.

So the article has failed to point the impact on bitcoin in case of a recession! We all know there are only two ways, either it goes up or down! Chance is, that bitcoin will see new height in case there is a recession! Recession usually impacts the trust of the mass! In case the trust factor comes to play, precious metals and bitcoin are expected to see heavy demand!

Rather than focusing on what will happen to bitcoin during a recession if we focus on the possible outcomes of recession then there will be a better probability of accuracy in the prediciton.
Chances are there that people will stop believing in banks and will move to a decentralized medium and bitcoin will best suit the case here. Hence leading to wide adoption.
Also, chances are there if such a wide adoption occurs then the price will fluctuate at huge levels which will create a panic in the market and hence leading to fall in the price because people might think that such an unstable currency cannot be used for daily purpose.

It all depends on how people react to the situation at that time.

Well, let's be honest here. What did you expect? It obviously failed to point out the impact simply because nobody knows until it actually happens. I'd rather have an article being neutral and accepting that there's really no way to know for sure that's going to happen rather than an article claiming that X is guaranteed to happen.

Also, you're assuming that the masses actually trusts bitcoin. The masses still looks at bitcoin as an investment vehicle instead of an hedge in economic uncertainty.

I don't agree with that reasoning. Bitcoin may be a safe haven asset within this small community, but it certainly isn't that in the real world where big pocket investors and institutions move the market.

If you force me to make a choice between going long or to short Bitcoin just before a recession, I'll short it. I don't even think that Gold will be of any use then, especially when you take into consideration most of the price discovery for the metal happens on platforms such as comex, where everything is cash based.

What will happen is that people start hoarding their local fiat currencies, or in case their local fiat currencies suck, the us dollar will be the safe haven. In South America you can pay with the us dollar almost everywhere. In what non-us dollar countries do you see stores and whatnot accept a foreign fiat currency on such a large scale?

I'm sure that during the next recession some asset will stand out, but I can't say which asset that will be, and it might not even be standing out in terms of going up x percentage, but just by not losing as much of its value as the rest of the assets in the market.

ok imagine bitcoins $price was $8400 and bread price was L4200 loaves

in a recession a loaf of bread can rise , such as $2->$4->$8
in short btc could go to $16800, $33600m $67200 but it would still only get you 4200 loaves of bread all the way along

inshort.. its 'if btc gets to $200k, i getting a new lambo'
          then 'if btc gets to $200k, i getting a new ford'
          then 'if btc gets to $200k, i getting a second hand ford'

If the dollar value of Bitcoin will rise just because dollar loses it's buying capacity, who on Earth needs that? Bitcoin investors expect to buy more goods and services than they can buy today for the same amount of BTC. They don't want to buy just more pieces of #85bb65 paper.

This is a good point. BTC would surely become popular as in the recession people tend to run from fiat and investments into physical goods so BTC as something decentralized would look good. There are people who are hoarding good alcohol because in a worst case scenario it can be a great tradable item needed not only as a drink but as an antiseptic and a painkiller.
The bad thing about it is that real physical goods like houses can outperform bitcoin and even when it goes to 200k you will not be able to buy an apartment with it because such apartments will also go up in value.

Yeah, I understand your point.  Bitcoin would lose purchasing power in the case of recession...or in any case where the value of bitcoin decreases.  That's obvious.

Remember that bitcoin was introduced to the world right at a time when a really bad recession hit.  It kept gaining in value during that time.  However I'm not confident that if the world experienced another recession like the 2008 one that it would even hold its value (whatever it would be at the time).  If people are out of work and the stock market is crashing I doubt that investors are going to be rushing in to buy an investment notorious for it's volatility.  There is no safe haven anywhere to be found in crypto.

What I think is bitcoin has come far ahead in the world economy that almost certain class of people from every economy is participating in it. If there is a global recession then a lot new people would come into it and the normal world could move deeper into the recession due to outflow of money from the Economy. But as we have never had bitcoin during any major world recession it would be pretty interesting to see how it reacts in sucha situation.

Point taken! No one really knows what's gonna happen to bitcoin in case recession hits the world economy! It's completely my assumption that bitcoin will score high during an uncertain economic situation. What we all can do is speculate!


An asset can be an investment as well as hedge for an unforeseen event! Take Gold as an example! Gold has been used for both purpose since centuries! You can ask a common people, why they invest in Gold, you will get the same answer! But I think Franky has given the most realistic answer. A lot depends on the purchasing power, if we are speculating realistically!

No one would really know what's going to happen during a recession until it's there. What's going to happen is only speculation made by the experts until it's really there, which IMO is too vague to give guesses at this point, though most likely be pointing up towards bitcoin being used as something of a hedge against the extreme bouts of inflation and whatnot. The article failed to emphasize on things that are most likely to happen, and only choose to hit on two things as if those are going to happen for certain. Lack of point-of-view makes an article biased on extremely vague topics.

I assume that a lot of people look at previous recessions and try to apply it to this new market. I'd like to remind you that a recessions is a transitioning phase to weed out the companies that don't innovate to make room for the innovative businesses. When things go bad we tend to adopt innovation the most, because we need it in order to grow. Just look at Uber and Airbnb when they where found.

So I think the recession is going to be good for some projects in this space. Maybe not immediately price wise but certainly through adoption. Most alts will drop heavily, however i see bitcoin potentially acting differently since its seen as some as the major currency or store of value. No doubt it will suffer a bad knee jerk reaction as big whales move out heavily from risky assets but the light will shine through later during the recovery stage of a recession.

Hence i expect it would behave like gold & silver. After the 2008 crash gold & silver prices initially dropped along with just about everything else. After that they both went crazy high. For Bitcoin it'd probably be the same.

Yes, we will never know unless we will get there, I don't know exactly what will happen, but let's see if people will choose to buy crypto and gold at that time or will invest more in stock market. We don't know, but for me if the value of gold declines too, I would take it as an opportunity as gold values increasing as time is passing by.

If there will be global recession what will happen to bitcoin is unknown. But we can somehow think of things that could happen when it happens.

1. Bitcoin will be the next legal tender
Because of fear of global recession people will turn into bitcoin as its new legal tender since fiat currency has no more value.

2. Bitcoin will collapse
Bitcoin is backed up by US dollars and so if global recession occurs and the US dollars loses its value then bitcoin together with all cryptocurrency will also lose its value.

These are just two possibilities but the actual events in the actual global recession only time will tell if what will happen to bitcoin.

On fact complex question, and I agree with some posts higher

In my opinion, there will be an economic recession in the near future and its sphere of influence will be much more than the recession happened in 2008. In that scenario, I think Bitcoin will come out ahead of that crisis situation. I say this based on that Bitcoin has a completely different system compared to fiat currencies.

In my opinion the value of bitcoin will decrease because lots of whales holding bitcoin will want to dump bitcoin to the market thereby weakning the value of bitcoin and there will be low demands because of the dump and recession.

You're right, it's very possible that a recession could lead to mass Bitcoin adoption. Chances are Bitcoin will do well during a recession, and that could lead to mainstream adoption once people begin losing faith in the centralized financial system.

So, you're basically talking about inflation? While the value of the dollar may decrease during a recession, if Bitcoin's price increases surely it will hold more value against the dollar, taking inflation into account. Could you expand on this?

We don't know for sure how Bitcoin will respond to a recession, but given that it was created in response to the 2008 recession, it's likely that it will do well. With that being said, you do have a very valid point.

Keeping ourselves active to meet worst case scenarios is a good thing, for the same it should not give a mind that always think of the worst cases. The recession that took place during the year 2008 has been overcome by every country with their own policies and other development programs.

When we talk of bitcoin in such a time period of recession, nothing is gonna make a disturbance to the market of bitcoin. There will be crash which will be due to the lack of sources. In specific, a recession mostly happens with the lack of economy. This lack mostly happens out of improper governing, war, corruption, terrorism and more other substances. When these incidents happen automatically there will be lack of mining which is the backbone to the network.

When the network power gets affected automatically the impact can be felt over the market. This is how the bitcoin network can get affected during recessions, and the prevailing economic condition won't make big impact as bitcoin network is independent.

Exactly my thoughts, although I have a feeling that the chances are it will take an incredibly hard hit and the price will plummet.

Of course some will say, "yeah but look what happens to Venezuela and how popular btc is there".. Well, that's because people in other first world countries use their hard earned money to buy it so they keep the price up. If a global recession takes place I think most people will cash out their btc (taking the price down) and turn into other traditional stuff...you know..like gold, silver or even... canned food XD

True,  global recession will not spare any business as everyone will be hit by it right from the vegetable seller to software firms and everyone will cut down on their spending which will cause further crisis and people will not take risk of investing into bitcoin during these uncertain period as a result bitcoin might take a hit and then gradually bounce back.  I don't think we might go through any recession as governments will try their best to stop it due to the losses which incurred in 2008 and they cannot afford to have one more recession.

I feel bitcoin will take a hit if recession happens just like any other industry or domain and there is no remedy to avoid it.

What are you talking about? We already are in a recession. Fiat will just keep losing value and people will look to something more "Stable" I say "stable" because bitcoin is volatile but its value will hold better than fiat I think. It might not suffer the same kinds of inflation problems fiat has had to face but it will a better choice a believe.

I think the price will go down since people will be desperate and stupid for money. People won't have enough money to feed themselves never mind investing in cryptocurrencies.

Lol we’re not and still goin thru sacrifices at this time but recession is still far from happening
Well volatility is what bitcoin and crypto made circulating because if we’re not volatile?sure investors won’t put money to profit
Have some point and money will lowered its value also because people will strive for food and don’t long for any value of products

You definitely have a good point - however, we do still need to see how Bitcoin will react to a recession - chances are it'll do well. Ultimately, a recession may drive mass adoption and increase Bitcoin's price.

You have a point - nobody knows for sure what is going to happen. However, the two likeliest outcomes are probably that Bitcoin will rise or it will fall - which one, we don't know. Recession could also lead to mass adoption because of people losing faith in the traditional financial systems, but we'll have to wait and see.

Yes, it is likely that Bitcoin's price will become quite high during a recession - particularly as it was created as a reponse to the global recession in 2008. However, we don't know for sure and will have to wait for the next recession to actually see what happens. At this point, everything is speculation.

You have a point, however people may also choose to disinvest from traditional assets to invest in Bitcoin, particularly if it responds well in the recession. We don't know the demographics of people who own Bitcoin, but chances are many people will HODL rather than sell up during a recession (unless they have no other choice).

Those are two likely options, although whether or not Bitcoin could collapse is definitely up for debate. Chances are, Bitcoin's price will rise during a recession. Will it become the next legal tender? Maybe not at this stage - but mass adoption could definitely occur.

I think it will not happen. I mean recession is something so broad for the whole world. There are maybe some areas of the world that will experience recession but other parts are booming. When recession happen it could possibly due to some scarcity or low value of their monetary currency. In that case, some areas or other currencies may also experience higher value. So most likely, those countries that do not adopt bitcoin will possibly experience recession. They must diversify their resources to adopt to the economic change.