Could Cryptocurrency Save You From Looming Recession?

We cannot know when it will happen, but we all feel it looming. The volume of Google search for ‘recession’ is at its highest point since 2009 (source). As Laura Veldkamp, the professor of finance at Columbia University said,

“If we all think there will be a recession, everyone produces a bit less in anticipation of lower demand. Lower production is the recession.”

She also points out that three of the best global economics state indicators — trade, housing, and industrial production markets are flat or falling right now.

On the Edge of the New Cold War

Trade, currency, oil, and technology wars of the world’s economic giants are more and more apparent and threatening. According to the 50 percent of 100 experts’ panel recession is coming in 2020. Another 36 percent of the panel said that the recession will happen in 2021 (source). Even Wall Street could not ignore the yielding curve, indicating fears of a downturn among the investors. People are lost and looking for a way to save themselves or at least prepare for the fall. So what can be done now? Is there a solution for you?

There is one part of the economic world that is mostly not affected by inflation, interest rates, and socioeconomic factors. Ironically it came to exist during our last recession back in 2008. It is all about digital assets. Experts are discussing if it could be our safe haven, while some people are already calling Bitcoin ‘digital gold.’

Are Digital Assets a Solution?

The optimistic views on possible digital currency performance during the recession is based on the analysis of the real-time crypto market reaction to any economic, social, or political events. It experienced heights with almost every new development of the US and China trade war and many recent changes in macroeconomics.

This pattern has been noticed in some older cases too. For example, when the announcement of the Brexit referendum results caused an extreme selloff of GBP back in June of 2016. Bitcoin was the top performer with a return of 7.1{6feaf74659bb228ac71d4b44630a8d52e718e4127a7f4337598235e19f63e205} and outperformed gold (4.7{6feaf74659bb228ac71d4b44630a8d52e718e4127a7f4337598235e19f63e205}), and global bonds (0.6{6feaf74659bb228ac71d4b44630a8d52e718e4127a7f4337598235e19f63e205}). The pound sterling struggled for the rest of that year, whereas Bitcoin rose from $624 to $961.

Of course, a regular person might lack the knowledge to properly assess possible ways where our global economics or crypto assets may go in the future. However, the growing trust and interest of major players’ (Facebook, Amazon, IBM, etc.) in blockchain and crypto might be a decent indicator. They have teams of analysts, and strategist that might know so much more than we do. As per Fidelity Investments institutional investors’ survey, about 22 percent of responders already had some connection to digital assets investments. And more than 30 percent of respondents said that they are open to investments in digital assets in the near future.

Time to Wait and See

Of course, it is hard to predict what crypto markets will do during a complete economic fallout. Nelson Minier, Kraken’s OTC lead executive, said,

“I’m not so sure that it’s (bitcoin) a safe haven asset yet, but I do think that it’s starting to act like one. <…> And when the market is getting shaky, you saw Bitcoin rise, I mean, you wouldn’t see that before, it was trading like a risky asset.”

It is all up in the air right now. We cannot know when and if the recession will come and how it will affect the digital currency market. Business cycles go through its peaks and troughs, and the current state of the global market makes us feel that cold breath on our necks. However, this possible crypto safe harbor is something more positive to keep in mind.

Also, if you are interested in helping us build a safe, fair, and reliable cryptocurrency exchange future, do not hesitate to join us by investing in our STO.

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