Is Bitcoin going to be the best hedge in the upcoming financial crisis?

[truehedge]

Hi Everyone,

There has been something on my mind for last couple of weeks and that is:

Is Bitcoin going to be the best hedge in the upcoming financial crisis?

Let's assume for a while that the financial crisis will break wide open in either late 2019 or at latest early 2020 - we live in everything bubble era.

What do you believe will be the ultimate hedge and why do you think that?

In 2008 crisis it was US treasuries and gold as it rose sharply in 2009, 2010 up to 2011 I don't think that would be the case this time as the mobility matters more and more.
I can't speak for US treasuries as I don't understand them that much let alone understand why would anyone invest in anything that does not even cover (real) inflation which in my opinion is about 7 - 10 % per year depending on where you live and things you buy.

In my opinion it will be Bitcoin (BTC) as it's the oldest, largest crypto with the largest hashing power behind it.

I would appreciate your comments and opinions.

Edit 17/12/2018: As some people thought I'm looking for an instrument that will not take ANY loss - that's not the case here - I'm looking at an instrument that will not stay down for say longer than 3 months.

Edit 19/12/2018: This assumption/planning/thought is for rich people - people who can barely afford food and just got laid off will not invest in anything (maybe lottery tickets if they want to call it investing).

[VB1001]

This video can give you an idea.

Escaping the Global Banking Cartel - Andreas Antonopoulos

https://www.youtube.com/watch?v=LgI0liAee4s&t=1s

[talkbitcoin]

i don't think there is any ultimate hedge in case of  a global financial crisis. and bitcoin is not yet ready for that kind of adoption although it has a lot of potential to be one. so i'd say bitcoin would be a pretty good choice but it can't solve all the problems.

Bitcoin (core) as it's the oldest, largest crypto

"bitcoin core" is the name of a full node/wallet not the coin itself. the coin is simply called "bitcoin".

[Tytanowy Janusz]

During crysis investors switch from high risk/ volatility assets (stocks) to low risk/volatility assets (gold, materials) to simply decise loss. Even if gold will decline too it will for sure decline less then stock. How about bitcoin? Well its high volatile and very high risk asset. So im my opinion it will be first to be dumped (and it happend in december 2017). In my opinion bitcoin was first asset dumped in incoming crysis. Next was small stocks from emerging market and S&P now.

In crysis time we could see bitcoin beeing dumped even harder (simply people will need money to live for not to invest in high risk assets). Even some life-time hodler will have to sell BTC to buy bread. But knowing the fact that average fiat currency lives 27 years, then we see hyperinflaction and devaluation. If, during cryusis, some fiat currencies will be under hyperinflation citizens of that country may run to bitcoin what will push price up making bitcoin first asset beeing pumped after crysis (or even during).

I diversify my porfolio. I still hold bitcoin (life-time hodl ) but i also have short positions on some stocks.

[clrpod]

I think that bitcoin will suffer as much as fiat or more in a financial crisis. It's not proven itself to be a store of value and is still highly speculative in nature. Therefore people won't look to move from stocks (risky) to bitcoin (way riskier) if they're facing a financial squeeze.

[truehedge]

This video can give you an idea.

Escaping the Global Banking Cartel - Andreas Antonopoulos

https://www.youtube.com/watch?v=LgI0liAee4s&t=1s

I have already watched this and if Andreas is rights the answer would be "yes" but I asked for your opinion - fellow users of Bitcointalk.

[truehedge]

i don't think there is any ultimate hedge in case of  a global financial crisis. and bitcoin is not yet ready for that kind of adoption although it has a lot of potential to be one. so i'd say bitcoin would be a pretty good choice but it can't solve all the problems.

Bitcoin (core) as it's the oldest, largest crypto

"bitcoin core" is the name of a full node/wallet not the coin itself. the coin is simply called "bitcoin".

bitcoin core - ok fair point I put in the brackets the ticker instead (BTC), my point is that it's not confused with any of the forks.

Regarding the crisis - I don't mean crisis where the electricity stops working and those who have canned food, guns & ammo are the ultimate winners. I meant something at the 1930s or 2008 level.

Therefore I don't expect that all the banks and all the cash will be distrusted and the only way to go forward would be crypto money - this might happen at some point but probably will take one or two more crises.

[figmentofmyass]

Hi Everyone,

There has been something on my mind for last couple of weeks and that is:

Is Bitcoin the ultimate hedge against the upcoming financial crisis?

Let's assume for a while that the financial crisis will break wide open in either late 2019 or at latest early 2020 - we live in everything bubble era.

What do you believe will be the ultimate hedge and why do you think that?

there is no ultimate hedge. in a serious market contraction, everything will crash. on top of that, debt monetization has pumped all markets---even gold and bitcoin have benefited from it.

a global crash definitely means a risk-off investment cycle. this early in its life, bitcoin is still considered a high-risk/high-reward investment, so money would likely flow out of the bitcoin markets and into safer havens.

[hatshepsut93]

People always seem to only think how a financial disaster will affect Bitcoin, but they forget that Bitcoin itself is hugely volatile, and it won't stop being volatile during any dramatic events in economy. So, you might try to use it as a hedge and then encounter some uneplainable price moves like a 20% crash or pump in a matter of hours. This unpredictability can make it a very poor hedge - people who are scared to lose 30% of their value in the long run might lose some 10% in one moment if they panic sell.

[okala]

That is what many speculators are saying and the financial crisis has started.  I will keep holding the little I have and to trade them in future.  Remember that blockchain technology is transparent, decentralized and it is not control by any governments or financial institutions therefore it will be the best hedge for dollar and other currency.

[Pursuer]

I agree with the first part of what Tytanowy Janusz said, during crises people are known to stay away from higher risk assets and bitcoin being volatile doesn't help that either so it surely is not the "ultimate hedge" against the financial crisis.

but bitcoin being what it is, has always been acting separate from any other market. for example when other markets are falling bitcoin has been rising in the past or vice versa. it always moves on its own and on top of  that being a global asset it doesn't take effects from local incidents that much.
so in my opinion in case of a financial crisis bitcoin would either not be affected at all or rise at least a little.

[truehedge]

Hi Everyone,

There has been something on my mind for last couple of weeks and that is:

Is Bitcoin the ultimate hedge against the upcoming financial crisis?

Let's assume for a while that the financial crisis will break wide open in either late 2019 or at latest early 2020 - we live in everything bubble era.

What do you believe will be the ultimate hedge and why do you think that?

there is no ultimate hedge. in a serious market contraction, everything will crash. on top of that, debt monetization has pumped all markets---even gold and bitcoin have benefited from it.

a global crash definitely means a risk-off investment cycle. this early in its life, bitcoin is still considered a high-risk/high-reward investment, so money would likely flow out of the bitcoin markets and into safer havens.

You're right, actually in September 2008 even the gold was down for a month and a bit and then it went on one hell of a rally. With that in mind I just changed the subject of the topic from "Is Bitcoin the ultimate hedge against the upcoming financial crisis" to "Is Bitcoin going to be the best hedge in the upcoming financial crisis?"

My point is - after the dust settles in something like late 2020 or early 2021, are we going to see Bitcoin thrive (price wise, adoption wise) or is it going to two digits and on verge of being almost forgotten?

The next Bitcoin halving will be on circa 26 May 2020 - probably right in the middle of the financial crisis - this should affect things. If I remember correctly last buildup started in fall of 2015 when we went to bottom of about $180 and then 9 months later it was already on the run and if it wasn't for the Bitfinex hack probably by end of summer 2016 we would have had $1000; instead we had to wait for it till January of 2017.

If history tends to repeat itself the next buildup will start in fall of 2019 if not earlier however the crisis might intervene with this...

[wendiar19]

I think it can be said like that because the price of bitcoin from 2009 to 2018 has a very sharp decline even exceeding the crisis in 2013.

[exstasie]

but bitcoin being what it is, has always been acting separate from any other market. for example when other markets are falling bitcoin has been rising in the past or vice versa. it always moves on its own and on top of  that being a global asset it doesn't take effects from local incidents that much.
so in my opinion in case of a financial crisis bitcoin would either not be affected at all or rise at least a little.

Bitcoin has existed only during a time when the overall markets were very bullish. Real estate, stocks, gold, and others have been in raging bull market ever since the recovery from the 2008 crash.

That's why I think it's dangerous to assume Bitcoin won't be affected by global market trends or financial crises. It's never experienced a major global downturn before.

[jackg]

but bitcoin being what it is, has always been acting separate from any other market. for example when other markets are falling bitcoin has been rising in the past or vice versa. it always moves on its own and on top of  that being a global asset it doesn't take effects from local incidents that much.
so in my opinion in case of a financial crisis bitcoin would either not be affected at all or rise at least a little.

Bitcoin has existed only during a time when the overall markets were very bullish. Real estate, stocks, gold, and others have been in raging bull market ever since the recovery from the 2008 crash.

That's why I think it's dangerous to assume Bitcoin won't be affected by global market trends or financial crises. It's never experienced a major global downturn before.

This is what I've been thinking recently. We've never had Bitcoin in a financial crisis, companies dealing in Bitcoin still file for bankruptcy like all other companies. I think at some point we might end up with a gold/stocks sort of system when things are considered too huge to fail and then artificially proped up by a government somewhere.

Gold doesn't have inflation but when it leaves the vaults, it's inflated because its owner is no longer hodling if in its value and it becomes available to the open market. The same can happen to Bitcoin.

[truehedge]

but bitcoin being what it is, has always been acting separate from any other market. for example when other markets are falling bitcoin has been rising in the past or vice versa. it always moves on its own and on top of  that being a global asset it doesn't take effects from local incidents that much.
so in my opinion in case of a financial crisis bitcoin would either not be affected at all or rise at least a little.

Bitcoin has existed only during a time when the overall markets were very bullish. Real estate, stocks, gold, and others have been in raging bull market ever since the recovery from the 2008 crash.

That's why I think it's dangerous to assume Bitcoin won't be affected by global market trends or financial crises. It's never experienced a major global downturn before.

That's very fair point - we never had global financial crisis and Bitcoin, hence it's in the speculation section.

[coinplus]

When a huge global financial crisis happens it just happens to everyone, there is absolutely no way of running from it.

Stocks will fall, crypto will fall, gold will fall, house value will fall. There will be nothing that will profit you at the time of an economical crisis, you will lose money no matter what you are invested into. There is no running away from this at all. Hence there is absolutely no way of profiting neither.

In the end crypto is used to the volatile world whereas other methods take years to recover so the best move you can make is stay on crypto and take the hit and just hope that you will win the recovering race compared to other investment methods.

I still prefer diversification and putting my money into multiple stuff but in the end none of that matters during a huge global crisis.

[Juggy777]

Hi Everyone,

There has been something on my mind for last couple of weeks and that is:

Is Bitcoin going to be the best hedge in the upcoming financial crisis?

Let's assume for a while that the financial crisis will break wide open in either late 2019 or at latest early 2020 - we live in everything bubble era.

What do you believe will be the ultimate hedge and why do you think that?

In 2008 crisis it was US treasuries and gold as it rose sharply in 2009, 2010 up to 2011 I don't think that would be the case this time as the mobility matters more and more.
I can't speak for US treasuries as I don't understand them that much let alone understand why would anyone invest in anything that does not even cover (real) inflation which in my opinion is about 7 - 10 % per year depending on where you live and things you buy.

In my opinion it will be Bitcoin (BTC) as it's the oldest, largest crypto with the largest hashing power behind it.

I would appreciate your comments and opinions.

I believe that people do consider it to be a good hedge, let's take the example of the Asian country India. Two years ago there was demonitisation in their country, and suddenly everyone bought bitcoins to hedge their looses and it's pertinent to note that bitcoins began to sell at a premium there. I believe bitcoins has become popular all over the globe, and gold shine has worn off as it's illiquid at times, hence I believe bitcoins can be used to hedge against the finicial crisis if it happens.

[adaseb]

I don't understand why everybody thinks there is going to be a recession just because the stock market has fallen close to the yearly open.

The economy is not in bad shape and the reason why the stock market has fallen so much is due to the FANG stocks which were over-valued to begin with. Every Tom, Dick and Harry was buying AAPL and Facebook they assumed it would keep going up forever and little did they realize that it was way over-valued as it was. No different than the Crypto bubble at the beginning of the year.

[exstasie]

When a huge global financial crisis happens it just happens to everyone, there is absolutely no way of running from it.

Stocks will fall, crypto will fall, gold will fall, house value will fall. There will be nothing that will profit you at the time of an economical crisis, you will lose money no matter what you are invested into. There is no running away from this at all. Hence there is absolutely no way of profiting neither.

You can always play the short side. I've been itching for many years to trade the ultrashort S&P 500 ETF and other similar instruments, but I'm patient enough to wait for a real bear market. I've watched too many short traders get slaughtered over the past several years to fade the stock market myself. It's the same as watching Bitcoin bears during bubbles.

I just wonder how long it'll take me to recognize it, and how much that'll cost me. Most people won't see a real crisis coming. That's why I don't expect one now. Everyone is ready for blood.