How Will The Upcoming Recession Affect Bitcoin?

[FinanciallyFreeFox]

I think it's important to consider what impact the recession that's upcoming will have on Bitcoin.

Bitcoin has never been through a recession, and so we don't know how owners of and investors in Bitcoin will react.

My thinking is as follows:

1. Retail investors by and large, will need to sell/spend their Bitcoin to pay their expenses and suppor themselves through the recession. So this could cause a dip in the price and a lessening in demand throughout the period.
2. Institutional investors may well choose to sell Bitcoin during the recession, in order to move funds into less volatile assets such as Gold.
3. Wales will likely hold their Bitcoin, and even pick up additional Bitcoin during any dips in the price, believing that Bitcoin will outlast the recession and will be far more valuable within the next 5, 10, and 15 years.
4. There won't be any parabolic rises seen in Bitcoin as a result of FOMO after the halving. This requires retail investors who have excess cash, or access to cheap credit, both of which are lacking during recessions.

My assumptions are based on research I've carried out and summarised in the below video:

https://youtu.be/faAjgUZJu0k

How do you think the recession will affect Bitcoin?

[1714233130]

1714233130

[1714233130]

1714233130

[1714233130]

1714233130

[figmentofmyass]

Bitcoin has never been through a recession, and so we don't know how owners of and investors in Bitcoin will react.

this is what has led bitcoiners to very binary thinking. one side believes a run for the exits in stocks = excess money flowing into bitcoin. the other side believes bitcoin will get dumped just like all other "risky" assets. i tend to fall into the second camp.

institutional investors will enter "risk off" mode and exit any long positions in crypto. retail investors will lose jobs/bonuses, depleting disposal investment income and forcing them to sell their bitcoin stashes.

1. Retail investors by and large, will need to sell/spend their Bitcoin to pay their expenses and suppor themselves through the recession. So this could cause a dip in the price and a lessening in demand throughout the period.
2. Institutional investors may well choose to sell Bitcoin during the recession, in order to move funds into less volatile assets such as Gold.
3. Wales will likely hold their Bitcoin, and even pick up additional Bitcoin during any dips in the price, believing that Bitcoin will outlast the recession and will be far more valuable within the next 5, 10, and 15 years.
4. There won't be any parabolic rises seen in Bitcoin as a result of FOMO after the halving. This requires retail investors who have excess cash, or access to cheap credit, both of which are lacking during recessions.

i agree with points #1-3, although i think investors would move to cash more so than gold.

#4 depends on the timing of the recession. the downturn may not appear in earnest until after the next bitcoin bubble, maybe in 2021+. too many people are expecting a top in the stock market right now. this bull market could easily extend another year or more.

[eaLiTy]

I think it's important to consider what impact the recession that's upcoming will have on Bitcoin.
Bitcoin has never been through a recession, and so we don't know how owners of and investors in Bitcoin will react.

If there is a major global recession then the entire market will bleed and nothing will escape that, people will panic when the entire market starts falling and you will see major sell off but i do not expect the BTCitcoin to have the same issue with the rest of the market but still if there is a major global issue no market is safe from it, there is economic slow down globally and i do not wish to go through another recession again.

[mu_enrico]

Generally, all assets/commodities will decrease in value when a recession happens. However, there are "inferior goods," i.e., lower quality goods that will perform better if consumers income declines.

IMO, Bitcoin is "normal goods." It will perform better when consumers income increases.

https://www.economicshelp.org/concepts/inferior-good/

[FinanciallyFreeFox]

Generally, all assets/commodities will decrease in value when a recession happens. However, there are "inferior goods," i.e., lower quality goods that will perform better if consumers income declines.

IMO, Bitcoin is "normal goods." It will perform better when consumers income increases.

https://www.economicshelp.org/concepts/inferior-good/

Yeah, there are some assets like Gold though that do well within a recession.

[Images21]

The recession that everyone knows is outside the Bitcoin world. It happens within the old financial system. I don't think there is a direct effect of fiat-based recession to the crypto market. The reduction of spending, which is what recession really means, does not cover Bitcoin. Less than 1% of the world's population is using Bitcoin for purchases. If the recession will affect Bitcoin, that would only be limited to less buying orders on exchanges.

[LeGaulois]

1) It's quite the opposite. If Bitcoin is used as an exit door and, as you say, more and more people will start to use Bitcoin for their personal expenses, etc., then it's a good thing. This would increase the adoption of BTC, it is rather a positive effect (and not only on its value). If there is a bigger demand, the price is supposed to follow.

2) The volatility will be the same, they know the risk. And the risk is the same. On the contrary, I think they will continue to hold until better signals are received.

3) Whales will continue to swing in the ocean and to eat shrimps.

Let's say the hyperinflation reduces the USD, who will win? Bitcoin and Gold. Take a look in Argentina and how BTC is used there.

[exstasie]

It's quite the opposite. If Bitcoin is used as an exit door and, as you say, more and more people will start to use Bitcoin for their personal expenses, etc., then it's a good thing. This would increase the adoption of BTC, it is rather a positive effect (and not only on its value). If there is a bigger demand, the price is supposed to follow.

Recession = layoffs, furloughs, and all that. He's saying people that already use BTC would be pressured to sell off their holdings to cover basic expenses, and that prospective investors wouldn't have capital to invest.

Let's say the hyperinflation reduces the USD, who will win? Bitcoin and Gold. Take a look in Argentina and how BTC is used there.

Sure, a global crisis characterized by a collapsing USD would be paradigm changing, but that's a far cry from a typical recession. We could still be a very long ways off from USD hyperinflation, whereas a recession is pretty much guaranteed sometime in the next 1-10 years.

[FinanciallyFreeFox]

Yeah it's not a question of IF there will be another recession, it's a question of WHEN.

It looks like there wil be another transference of wealth.

The masses will be selling off their assets on the cheap to meet their expenses, their property or stocks for example, or their Bitcoin. People need to eat at the end of the day.

The smart money will then be buying up these assets for pennies on the dollar.

And the cycle begins again....

If you can stack up on valuable assets like BTC and weather the storm/manage your finances, then you can profit like all the other smart money investors.

That's what I'm doing.

[Juggy777]

I think it's important to consider what impact the recession that's upcoming will have on Bitcoin.

Bitcoin has never been through a recession, and so we don't know how owners of and investors in Bitcoin will react.

My thinking is as follows:

1. Retail investors by and large, will need to sell/spend their Bitcoin to pay their expenses and suppor themselves through the recession. So this could cause a dip in the price and a lessening in demand throughout the period.
2. Institutional investors may well choose to sell Bitcoin during the recession, in order to move funds into less volatile assets such as Gold.
3. Wales will likely hold their Bitcoin, and even pick up additional Bitcoin during any dips in the price, believing that Bitcoin will outlast the recession and will be far more valuable within the next 5, 10, and 15 years.

My assumptions are based on research I've carried out and summarised in the below video:

https://youtu.be/faAjgUZJu0k

How do you think the recession will affect Bitcoin?

While one can’t find fault with the scenarios you have listed, but in your own words you have admitted that no one knows how bitcoin will react when recession hits hence I believe we may see different scenarios.

1) Retail investors are not as foolish as they were in the past they know recession periods can last long, hence they won’t sell the only currency that has proven time after time that it can outperform the market.

2) Any institutional investors who chooses gold over bitcoin really needs to stop investing, but there’re hardly any institutional investors who’ll do that even when gold prices were rising we hardly saw bitcoin money being cashed out for gold.

3) Whales may just continue to hodl their coins, and will only sell if prices hit new peaks.

[FinanciallyFreeFox]

1) Retail investors are not as foolish as they were in the past they know recession periods can last long, hence they won’t sell the only currency that has proven time after time that it can outperform the market.

One thing I disucssed in the video (time stamp below) is an anecdotal example of a thread created by someone looking to sell their BTC to free up cash for expenses, rather than dip into their emergency fiat cash.

https://youtu.be/faAjgUZJu0k?t=121

If users from Bitcointalk (who are going to be more clued up than the average retail investor) are selling their BTC to pay for stuff instead of spending their fiat, and at this stage.

Then think about how many people are going to be selling their BTC when the recession is in full force and people are really feeling the pinch.

You clearly have a long term perspective, but most retail investors are quite fickle and have a short term mindset when it comes to investing.

They don't really learn. That's why we see the same cycles every 10-15 years.   

[abhiseshakana]

I don't think the recession will have a significant effect on cryptocurrency. Why? Because talking about cryptocurrency talks about the digital economy, whereas the digital economy map is now only concentrated in the United States and China.

The United States and China are far from recession. As for developing countries affected by the recession, most of the people are blind about the digital economy, so to educate the benefits of the digital economy takes considerable time and energy.

Based on the experience of a country that has been hit by a recession, the impact of recession is felt in all walks of life but the simple language is that people only need to live very frugally not like the end of the world drama.

[tadpole_bitfrog]

My view is now quite simple about the recession period, because bitcon was born to reduce the severity of this recession.
people will gather cash to buy Gold and Bitcoin, they will hold it to go through recessions.
That is the strategy of most countries in the world and bitcoin is doing its job very well.

[FinanciallyFreeFox]

people will gather cash to buy Gold and Bitcoin, they will hold it to go through recessions

I hope this does happen.

I'm prepared for both outcomes though.

[1Referee]

My view is now quite simple about the recession period, because bitcon was born to reduce the severity of this recession.
people will gather cash to buy Gold and Bitcoin, they will hold it to go through recessions.
That is the strategy of most countries in the world and bitcoin is doing its job very well.

That's what people hope for. Bitcoin however is a risk-on asset that investors generally buy into for its up side, but are prepared to let go of it when the tide turns against them.

When people lose their jobs their priority won't be to buy either Gold or Bitcoin, they'll sell assets they don't necessarily need to comfort themselves with a stacked bank account that will get them through the forthcoming months without having to worry about bills they can't pay. It happened in the past as well, so it's not that it hasn't been put to the test yet.

I'm happy to be proven wrong and see Bitcoin go up, because that's great for me too, but I wouldn't really put too much confidence in it.

[Febo]

I think it's important to consider what impact the recession that's upcoming will have on Bitcoin.

Bitcoin has never been through a recession, and so we don't know how owners of and investors in Bitcoin will react.

My thinking is as follows:

1. Retail investors by and large, will need to sell/spend their Bitcoin to pay their expenses and suppor themselves through the recession. So this could cause a dip in the price and a lessening in demand throughout the period.
2. Institutional investors may well choose to sell Bitcoin during the recession, in order to move funds into less volatile assets such as Gold.
3. Wales will likely hold their Bitcoin, and even pick up additional Bitcoin during any dips in the price, believing that Bitcoin will outlast the recession and will be far more valuable within the next 5, 10, and 15 years.
4. There won't be any parabolic rises seen in Bitcoin as a result of FOMO after the halving. This requires retail investors who have excess cash, or access to cheap credit, both of which are lacking during recessions.

My assumptions are based on research I've carried out and summarised in the below video:

https://youtu.be/faAjgUZJu0k

How do you think the recession will affect Bitcoin?

It can happen that recession come after the bull run and next ATH. There is less and less chances for that but it still is a chance. Also. Biggest chunk of wealth is in hands of small elite. They dont need to sell anything since have plenty of everything already or most likely dont have any Bitcoin now.  When they see things crash they might consider it. Of course Gold will be strong contender here.  If recesion strikes next year, that will for sure postponed the bull run of current bitcoin cycle.

[hugeblack]

It's all about what happens in the world during this recession. There are many risks, fears, and uncertainties in the markets that make investors flee to cryptocurrencies as they make better gains than the stock market.
We have a lot of stable currencies and a lot of platforms that will try to make the price above $ 1000 at normal levels and thus will be more keen to buy, especially as prices allow it.
If the price collapses below $ 1000, we may lose a lot of hodlers and move slowly or die quietly.
Generally, over the next decade, we will see either a great boom or a crash in stages.

[beerlover]

I honestly feel like there would be a bit of difference between selling your bitcoins for extra money to pay for stuff during recession. For example, the first one would be easily covered by the whales buying but at the same time we will still have miners selling which whales usually cover.

Second one is not that easy because they already lost money on stocks and they would want to recoup that money quickly and gold will not make that money that quickly, they really will stay in bitcoin. Third one could be true and I believe those people who have excess money and not even care about how much bitcoin they have might so that is true. I have no idea about the fourth, the truth is I actually have no idea what parabolic runs means . That is why I find 1 correct, 2 wrong and 1 indecisive on these.

[figmentofmyass]

The recession that everyone knows is outside the Bitcoin world. It happens within the old financial system. I don't think there is a direct effect of fiat-based recession to the crypto market. The reduction of spending, which is what recession really means, does not cover Bitcoin.

where do bitcoiners get this idea that crypto markets exist in a bubble?

people are buying and selling bitcoin for real fiat currency---where do you think that fiat money goes/comes from? the economy. buyers have disposable investment capital from their jobs or other successful investments.

but what happens when investors are losing their jobs and their investments are tanking like in a recession? new investment capital dries up. and those job losses might hit bitcoin investors too. if forced to choose between starving and selling bitcoin, most hodlers will choose the second option.

all in all, that spells increased supply and decreased demand. that's an obvious recipe for lower prices.

[The Sceptical Chymist]

Bitcoin has never been through a recession

Eh...bitcoin was introduced to the world right at the beginning of a huge recession and existed and thrived all the way through it.  By the time the economy had recovered in 2013 or so, bitcoin was hitting a huge high.  So that statement isn't exactly true.  What's true is that it hasn't been through the next recession, which I guess is what this thread is about.

Now, this "upcoming" recession thing: I have no doubt that the stock market and economy can't continue to boom forever.  We've been in one of the longest bull markets in history, but as they say the laws of gravity apply to economics too.  What I'm not sure of--and what no one can be sure of--is when the economy is going to start heading south.  Right now things still seem to be pretty good, though I confess I don't stay abreast of financial news anymore.

My best guess as far as bitcoin is concerned is that it might crash right along with the stock market.  When stocks start to slide, investors tend to move their money to more stable assets like bonds, metals, real estate, and the like.  I have a feeling that money isn't going to move into crypto--it's just not safe enough (and that's a serious understatement).  As it stands, there are probably a lot of people investing in bitcoin who can't really afford to do so.  What do you think is going to happen if unemployment numbers start to increase?  Yep, they'll sell their bitcoin for whatever they can get. 

But hey, I could be totally wrong.  As I said, bitcoin did boom right through the housing/banking crisis of 2008-20XX.  In any case, I'm hoping the next recession doesn't come soon and that bitcoin will at least retain most of its value.