When you talk about the recession, the feelings of loss and safety are usually closely associated. These days, the word ‘recession’ is almost thrown away so casually that it doesn’t seem scary enough.
But that’s for the ones on the outside, looking through the sidelines.
If you feel safe and secure about your investment portfolio, chances are after hearing about any sort of recession news, you won’t exactly feel secure.
For somebody that jumped in the astounding crypto bull markets of 2021, there barely seems any kind of a silver lining for them to recover their funds. After all, the markets haven’t grown enough since then!
But hold on, first things first!
The elephant in the room – the recession, right?
Okay, is a recession incoming?
It’s no surprise to anybody that the economy right now isn’t exactly thriving right now.
Any student of the economy learns at some point that two straight quarters of declines are almost always directly proportional to an incoming recession.
You see when you think about recession from any point of view, the GDP isn’t always the determining factor. There are various economic and social factors that also play a very important role in this case.
A recession practically considers unemployment, industrial output, retail sales, and the general income of people into consideration. If all these factors are taking a hit, the future for a certain time won’t exactly seem promising.
With two consecutive quarterly declines in GDP, a recession ‘was’ supposedly incoming.
Quite like the last major recession, there right now is a new asset class in the form of crypto on this financial landscape that just can’t be overlooked.
And maybe, just maybe, we might not have to witness one at all, right?
However, there’s a question that still remains – with a new asset class like crypto, how are things going to be affected?
Crypto & Recession
Now crypto exactly isn’t one of those things that have witnessed a lot of economic recessions. If anything as such happens, this might be the first time.
For the most part, crypto has been witnessing favorable markets, up until the pandemic of course. But instead of going in a downward spiral, the markets thrived so much that it started to enter mainstream markets.
Since its inception back in 2009, Bitcoin hasn’t changed much but grow.
However, there are a handful of periods of poor economic performance in the last 13 years that we can look at to get an idea of what crypto’s future might hold if a full-scale recession ensues.
One of these few periods was back in 2015 when after the year 2014, the GDP grew but at slower rates each quarter, and finally bottomed out at a 0.1% growth rate in the fourth quarter of 2015.
During this time, the crypto asset class also took a major hit.
Let’s talk about Bitcoin
For investors or traders of Bitcoin, does it really matter right now if there’s a recession?
Well, looks like no!
Bitcoin fundamentally, at least right now, seems to be a place to store your excess value than regular value.
But from a recession point of view, it’s almost inevitable that during a recession, the businesses that ‘also’ use Bitcoin for multiple purposes could see a decline in doing so.
Because of a recession, the probability of investors looking for an alternative to government fiat might also increase, making crypto the alternative method to combat the economic downfall.
Should you invest?
Maybe. Maybe not…
What’s for sure is that any decision you make should be a consequence of a long and well-thought-out consideration of the economic environment around us right now…
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