Again The US economy continues to show negative numbers, which could affect world finances. What role does bitcoin play here?
First, I want to emphasize what an economic recession is or entails. Occasionally, recessions can be caused by factors beyond anyone's control, such as problems in other nations or changes in the global economy. Sometimes they are the result of bad decisions made by organizations or governments. Whatever the cause, the end result is always the same: the economy shrinks and everyone suffers as a result. A global economic downturn could have great effects on other nations and people around the world. Given the size and strength of the US economy.
The alarm of a possible global recession continues to sound, while the leaders and regulators of the United States deny the seriousness of the crisis. However, new data on the behavior of the economy of this country suggest a difficult outlook. In this context, Bitcoin has an opportunity to test its use cases.
According to information from the Federal Reserve, money market funds are having aggressive growth. But why did this worry economists? Well, money market funds are highly liquid investment products, just like cash and government bonds. Investors usually use them when they want to invest their capital with minimal financial risk, especially in contexts of great economic instability.
Figure 1: Money market funds serve as a liquidity buffer in crisis situations.
The graph above shows that the use of money market funds has increased exponentially during the periods immediately preceding economic crises or recessions. Analysts have noted that this pattern tends to repeat itself during difficult times, such as the 2008 economic crisis and the coronavirus pandemic.
Figure 2: Dates of the private debt peak (green dotted line), the oil peak (red dotted line), and the Lehman bankruptcy (black dotted line).
Figure 3: Economic recession in times of the coronavirus pandemic.
From any point of view, a global recession is worrisome and, above all, alarming to see how the US authorities minimize the severity of the crisis. While it is 100% understandable that people's perspectives on the economy differ, but you have to know how to recognize the data that paints a challenging picture. The importance of approaching things from a balanced angle should not be ignored. The bitcoin cryptocurrency is highly speculative and volatile. Although some investors have experienced sizeable gains, there have also been instances of sizeable losses.
In my opinion, honestly these global recession alerts, I feel like Bitcoin has a chance to show its great potential. Bitcoin has the ability as an option to wait and be taken into account for these uncertain times, the risks are known but its rewards are also perfectly known, I can only say that we hope that this does not happen to majors, despite the fact that it may be the BTC a way out of this problem we have to take into account that many people are not involved or soaked in information in this world of cryptoactives, the crucial and main thing in this type of case is to thoroughly investigate Bitcoin, understand how it works and determine if it is fits our financial objectives and risk tolerance.
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Fountain:https://www.criptonoticias.com/mercados/nuevas-alertas-recesion-puede-hacer-bitcoin-contexto/