US potential Recession and its effect on Cryptocurrency

[jambulbebek873]

Couple days ago, Bloomberg updated their prediction model that they created last year to determine the odds whether USA will plunge into recession within 12 months, and now the chance of a recession stands at 100%, confirming an end to the nation’s longest-running expansion. Since I'm pretty new in cryptocurrency, what's your opinion regarding this related to cryptocurrency, is there any historcial model than can be compared with this kind of events? Will this effect long-term future for Crypto in general?

model: https://www.bloomberg.com/graphics/us-economic-recession-tracker/

[jackg]

I think there are two mine ideologies with crypto:
1. It gets treated like cash
2. It gets treated like gold

If it's treated like gold we'll probably see quite a fall when the recession hits
If it's treated like cash, cash is seen as a bit of a guarenteed investment so bitcoin will be in good steadings...

[Sanugarid]

I think there are two mine ideologies with crypto:
1. It gets treated like cash
2. It gets treated like gold

Cash and Gold, never gets old. Most probably bitcoin is treated that way because it can be both, a currency and a store of value, maybe that is why crypto is in demand right now. I like seeing people having it as both it feels like we are getting much of what we wanted in the first place, we didn't even ask bitcoin to reach $20K right? Or did we?

If it's treated like gold we'll probably see quite a fall when the recession hits
If it's treated like cash, cash is seen as a bit of a guarenteed investment so bitcoin will be in good steadings...

I think if people treat bitcoin more as a gold then probably there would be a higher price resistance because in times like this people are fearful and they are more likely to hoard it. Otherwise, if treated like cash (assume that we already have plenty of merchant accepting bitcoin) people holding bitcoin would not hesitate to spend it no matter what the price is.

[TIDOVEE]

If we think any recession in the US will have a noticeable effect on crypto currency then don't you think US is majorly in control on crypto. Although, I believe since we have exchanges in USD measures, it means a lot. Now is the time to observe the decentralized character of crypto. In that, with the present condition of the world cryptocurrency must stand

[coinfinger]

US economy might go into recession but I am not going to say that bitcoin will be affected. The price of Bitcoin might continue to increase despite whatever is going to happen next. By then many people will start to invest their money in Bitcoin and running away from fiat, causing even major crashes on fiat, while the cryptocurrency market continues to boom.

Even right now if you check some exchanges you will notice that the rate of buying Bitcoin has increased more than the rate of selling, showing that more people are ready and believe in bitcoin as their safe haven.

[Harlot]

I think there are two mine ideologies with crypto:
1. It gets treated like cash
2. It gets treated like gold

If it's treated like gold we'll probably see quite a fall when the recession hits
If it's treated like cash, cash is seen as a bit of a guarenteed investment so bitcoin will be in good steadings...

My guess is it won't be neither of the two but if you simply mean Bitcoin being treated as "gold" to an asset then you are right. In the first place most of us here involved in the crypto industry treat Bitcoin as an investment and not some other alternative for payment, even if majority of the hodlers are using Bitcoin for payment most of their holdings are still intact hoping for it to grow. We all know that during a recessions all assets are vulnerable to drops and that includes real estate as people are liquidating their assets for money due to financial losses from lost of jobs to businesses. This is what will happen to Bitcoin if they predicted the recession correctly, we all see how the markets reacted to the COVID-19 pandemic, I believe it would be nearly the same when the recession hits us.

[jackg]

I think there are two mine ideologies with crypto:
1. It gets treated like cash
2. It gets treated like gold

Cash and Gold, never gets old. Most probably bitcoin is treated that way because it can be both, a currency and a store of value, maybe that is why crypto is in demand right now. I like seeing people having it as both it feels like we are getting much of what we wanted in the first place, we didn't even ask bitcoin to reach $20K right? Or did we?

If it's treated like gold we'll probably see quite a fall when the recession hits
If it's treated like cash, cash is seen as a bit of a guarenteed investment so bitcoin will be in good steadings...

I think if people treat bitcoin more as a gold then probably there would be a higher price resistance because in times like this people are fearful and they are more likely to hoard it. Otherwise, if treated like cash (assume that we already have plenty of merchant accepting bitcoin) people holding bitcoin would not hesitate to spend it no matter what the price is.

I also forgot that unlike gold, and like currency, bitcoin is divisible.

People might want to go into it when there's hyperinflation in their current currency since it can be decided for things like croceriea and electric, they don't need some sort of token or to try to melt down gold into smaller grains...

[exstasie]

I think there are two mine ideologies with crypto:
1. It gets treated like cash
2. It gets treated like gold

If it's treated like gold we'll probably see quite a fall when the recession hits
If it's treated like cash, cash is seen as a bit of a guarenteed investment so bitcoin will be in good steadings...

Why would the market ever treat BTC like cash? We can already rule that out based on the 64% crash last month. In a liquidity crisis and recession, people obviously dump BTC for cash.

It's not treated like gold either. Gold only fell 15% and is now trading higher than it was in February and March. BTC dropped 64% and is still down 35% from its February highs.

The market obviously believes BTC is much, much riskier than either cash or gold. It is its own asset class, a very risky and experimental one.

[squatz1]

I think there are two mine ideologies with crypto:
1. It gets treated like cash
2. It gets treated like gold

If it's treated like gold we'll probably see quite a fall when the recession hits
If it's treated like cash, cash is seen as a bit of a guarenteed investment so bitcoin will be in good steadings...

Why would the market ever treat BTC like cash? We can already rule that out based on the 64% crash last month. In a liquidity crisis and recession, people obviously dump BTC for cash.

It's not treated like gold either. Gold only fell 15% and is now trading higher than it was in February and March. BTC dropped 64% and is still down 35% from its February highs.

The market obviously believes BTC is much, much riskier than either cash or gold. It is its own asset class, a very risky and experimental one.

Ah, this is one of the first times that I've found someone that talks similar to me.

You're without a doubt right. In the event of a crisis where people are losing their jobs, retirement funds are crashing in value (not too bad with the markets recent rally, but still), tenants (residential and commercial) stop paying, and so on -- PEOPLE ARE GOING TO SELL OUT OF THEIR SPECULATIVE INVESTMENTS FOR SHORT TERM CASH.

Maybe a few years ago this wouldn't be the case, but bitcoin is more speculative now.

[SaShiRaJaVu]

Couple days ago, Bloomberg updated their prediction model that they created last year to determine the odds whether USA will plunge into recession within 12 months, and now the chance of a recession stands at 100%, confirming an end to the nation’s longest-running expansion.

This is not the situation that will affected US alone but we are facing a global recession in the next one year, even now many companies are in crisis because we are under a lock down and many companies will be in trouble in the coming months, when the economy crumbles then all the markets will be affected, i am not expecting a huge drop in bitcoin relative to the stock exchange but still we will see the market going down.

[Negotiation]

I agree with you that Bitcoin has no effect on the recession but on the market All cryptocurrencies will fall below the market if they fall above the market This evil is occurring not just in the United States but all over the world. This evil cannot be easily overcome But if the crypto market is not affected the United States will be able to overcome their evil.

[sensimilia]

People will search stability if we will see real recession. They will need money for everyday use, not for investments. I dont think that this could be good for any asset

[mikeauerbach]

The recession is unlikely to affect cryptocurrencies positively. Nowadays Bitcoin isn't a good medium of exchange, it can't behave like currency successfully. And people won't be ready to invest in it, on the contrary they will sell cryptos.

[FanatMonet]

In the event of a recession, I will assume that cryptocurrencies can get a very powerful blow. If there will be a recession, then I would bet on gold and real estate. People need to live somewhere, and gold has always been a pillow in times of crisis.

[RealMalatesta]

Couple days ago, Bloomberg updated their prediction model that they created last year to determine the odds whether USA will plunge into recession within 12 months, and now the chance of a recession stands at 100%, confirming an end to the nation’s longest-running expansion. Since I'm pretty new in cryptocurrency, what's your opinion regarding this related to cryptocurrency, is there any historcial model than can be compared with this kind of events? Will this effect long-term future for Crypto in general?

model: https://www.bloomberg.com/graphics/us-economic-recession-tracker/

That is why sometimes we see bitcoin treated like gold and store of value because it can be a commodity and it can be store of value which is why when things go down it goes up, and sometimes we see it going down with everything else together because it is seen as money as well. So, bitcoin is money AND gold at the same time, it is gold you can spend everywhere, not really a common thing and not really something world is used to so far, which is why it is so volatile and it moves so unexpectedly.

However when recession hits, that usually happens slowly and over time which gives bitcoin enough time to recover even if it falls, so I have no worries there. Lets assume american markets go down and down and down for a long period of time, that is not scary, but if it CRASHES like all of a sudden just like how it did, that would be very bad for bitcoin as well.

[abhiseshakana]

Ah, this is one of the first times that I've found someone that talks similar to me.

You're without a doubt right. In the event of a crisis where people are losing their jobs, retirement funds are crashing in value (not too bad with the markets recent rally, but still), tenants (residential and commercial) stop paying, and so on -- PEOPLE ARE GOING TO SELL OUT OF THEIR SPECULATIVE INVESTMENTS FOR SHORT TERM CASH.

Maybe a few years ago this wouldn't be the case, but bitcoin is more speculative now.

The economic condition during the corona pandemic, in fact, is hitting the price of bitcoin, even pra halving moments cannot raise the price of bitcoin yet. The corona pandemic was the first test of bitcoin strength, and in reality, the bitcoin was beaten by the recession.

The decentralized nature is not strong enough. This is because bitcoin penetration only on the trading floor, it doesn't touch the real sector and it is not used in daily life (bitcoin lost its function as a medium of exchange). But If bitcoin has become a millennial lifestyle then the fluctuation will be more stable and the foundation will be strong, so it is not easily affected by real economic conditions.

[exstasie]

Why would the market ever treat BTC like cash? We can already rule that out based on the 64% crash last month. In a liquidity crisis and recession, people obviously dump BTC for cash.

It's not treated like gold either. Gold only fell 15% and is now trading higher than it was in February and March. BTC dropped 64% and is still down 35% from its February highs.

The market obviously believes BTC is much, much riskier than either cash or gold. It is its own asset class, a very risky and experimental one.

Ah, this is one of the first times that I've found someone that talks similar to me.

You're without a doubt right. In the event of a crisis where people are losing their jobs, retirement funds are crashing in value (not too bad with the markets recent rally, but still), tenants (residential and commercial) stop paying, and so on -- PEOPLE ARE GOING TO SELL OUT OF THEIR SPECULATIVE INVESTMENTS FOR SHORT TERM CASH.

Maybe a few years ago this wouldn't be the case, but bitcoin is more speculative now.

Interesting, why do you think BTC is more speculative than it used to be? I figure the longer BTC sticks around, especially trading at impressive values like 4+ figures USD, the less risky it becomes over time. Every year the "BTC to $0" scenario becomes less likely.

At the same time, let's not kid ourselves: it's ~11 years old. It's a baby. It's a brand new experimental asset class. It would be crazy to consider it a store of value in a liquidity crisis.

[webtricks]

I think there are two mine ideologies with crypto:
1. It gets treated like cash
2. It gets treated like gold

If it's treated like gold we'll probably see quite a fall when the recession hits
If it's treated like cash, cash is seen as a bit of a guarenteed investment so bitcoin will be in good steadings...

That was a weak analogy.

Global Economy has seen 4 major recessions in last 100 years. Taking them as precedent, we can reach to this conclusion:

Precious metals like gold rise in the short-term during recession period. Once economy is out of recession and comes into recovery period, purchasing power of fiat currency (cash) start to rise. During this period, price of gold may fall a bit (~5%) but once economy stabilizes somewhat, investment once again start floating into precious metals and their prices rise exponentially.

However, this phenomenon depends upon how trustworthy the asset is. This may not work in the case of Bitcoin at all because it is too young and untrustworthy to be considered in precious metal class.

[squatz1]

Why would the market ever treat BTC like cash? We can already rule that out based on the 64% crash last month. In a liquidity crisis and recession, people obviously dump BTC for cash.

It's not treated like gold either. Gold only fell 15% and is now trading higher than it was in February and March. BTC dropped 64% and is still down 35% from its February highs.

The market obviously believes BTC is much, much riskier than either cash or gold. It is its own asset class, a very risky and experimental one.

Ah, this is one of the first times that I've found someone that talks similar to me.

You're without a doubt right. In the event of a crisis where people are losing their jobs, retirement funds are crashing in value (not too bad with the markets recent rally, but still), tenants (residential and commercial) stop paying, and so on -- PEOPLE ARE GOING TO SELL OUT OF THEIR SPECULATIVE INVESTMENTS FOR SHORT TERM CASH.

Maybe a few years ago this wouldn't be the case, but bitcoin is more speculative now.

Interesting, why do you think BTC is more speculative than it used to be? I figure the longer BTC sticks around, especially trading at impressive values like 4+ figures USD, the less risky it becomes over time. Every year the "BTC to $0" scenario becomes less likely.

At the same time, let's not kid ourselves: it's ~11 years old. It's a baby. It's a brand new experimental asset class. It would be crazy to consider it a store of value in a liquidity crisis.

First things first, I'm not saying that Crypto is going to go to $0 sometime soon. Though I do think the massive swings in volume are going to take away from the legitimacy of thinking that crypto or just Bitcoin can be used by companies, consumers, merchants, etc.

You're right, this is a new experiment. I just think a lot of people in this space think that because the stock market is going down then crypto is going to moon because its ANTI GOVERNMENT AND ANTI TRADITIONAL. Just wanted to show that's not the case, and it's all interconnected in someway.

[fiulpro]

Cryptocurrencies are decentralized and we are always talking about how it works and how it is not controlled by any centralized body but we fail to ignore the fact that even though it is volatile at a time like this , at a time of economic crisis , it gets stabilized .
With the government failing , people all around the world starts pooling in whatever they can afford and trading volumes are increased at a beneficial rate.
Therefore with the US failing in the economic sector I do think it won't do anything related to cryptocurrencies because it is not dependent on US only but ok every single country where people are allowed to engage in it.