Topic: How Will The Upcoming Recession Affect Bitcoin? (Read 490 times)

It will greatly affect the crypto market. If you remember the fact that the US started to tax on China, the value of bitcoin would have dropped sharply in early 2019.
When the economy is in recession, cash flows into gold and safe assets and has a finite supply, it will not flow back to bitcoin. so I think bitcoin will continue to bleed when the recession comes. Sharks will sell bitcoin to buy gold.

in my opinion if there is an economic recession some people will choose to secure their assets. and one way to secure assets is to move their financial assets from high risk to low risk. usually people will choose gold. and bitcoin is a high-risk investment tool. so I think when there is a recession will not have an impact on bitcoin.

This is a fact. Bitcoin has potential of changing financial condition of not only individuals but those of countries but for this, we bitcoiners shall spread awareness regarding this spectacular currency which has dual nature i.e. both currency and investment. If people realize its potential, only then companies etc would accept it.

It is possible that during the next global recession, Bitcoin, for some time, will become a lifeboat for the capital of both ordinary and institutional investors.
In view of this, the prices for cryptocurrencies will have to grow significantly, at least at the beginning of the crisis.

But what will happen next is a big question. After all, the market is still volatile and speculative, which means that upon reaching certain highs capital outflow from bitcoin to fiat may occur, which may well cause a severe recession in the cryptocurrency market.

Yes, during recession the one getting the hard hit is going to be the fiat money borne out of the traditional financial and economic system. In this way, Bitcoin is going to be highlighted as the best alternative to the usual money as it is deflationary and not inflationary. Remember that during recession, there is a possibility of inflation roaring its head especially if there is a problem of supplies of goods against the existing demand though the other thing can also occur. During chaotic situations, there will always be FOMOS and FUDS and I am sure that Bitcoin lovers would be using the opportunity to share positive things in favor of Bitcoin which people can easily pick up. Of course, the pervading doom and gloom sentiment will always be there and Bitcoin can also be affected with this. Now, we are talking here of many possible scenarios that can occur if ever a global recession can hit us but what can happen might be so different from the things we are thinking especially since Bitcoin has not yet been tested under the same economic malady. Let's see.

The recession could indeed make fiat losing value. People will search the other way to save their money into another form, and many of them still believe in gold. I think it's only a few people who move their funds into bitcoin because I think most people will be afraid of the volatility in bitcoin. They choose gold because the up and down of the price is not significant depends on bitcoin price. And besides that, they are too busy to always check on the bitcoin price.

Gold now still be the number one of people's choices as the investment. But bitcoin could be another choice of people if they can see the other benefits of bitcoin in the long-term. But that will depend on how they look bitcoin as the investment because not all people can accept the volatility of bitcoin price. But as we know that technology becomes better nowadays, people will try to look at another investment and soon, they can moves their funds into bitcoin too.

Bitcoin have depend on how situation or regulation from some country, when many country have allowing bitcoin become legal bitcoin price higher, but when many economic community want to banned bitcoin make bad situation for bitcoin with lower price. Bitcoin be part with many company and allow for accepting bitcoin.

The simple language is whether cryptocurrency is a necessity in a digital economy or is it just a choice. When someone assumes that cryptocurrency assets are not safe, it is actually not based on the problem of volatility alone but rather because beginners do not understand how cryptocurrency works. Beginners are desperate to invest in cryptocurrency but do not understand the product knowledge.

When talking about investment options during a recession, gold and silver are definitely the safest winners. The safest is not necessarily the most profitable. Going forward, Bitcoin will grow even more because in principle millennial generation always follows the trend. Now and in the era of digital financial technology, bitcoin will be an option as long as many people understand the internet, blockchain technology and the spread of internet connections evenly throughout the world.

The hope is that bitcoin will become a way of life, and to be a way of life must be easily accessible to everyone.

It depends on whether bitcoin is more attractive than gold. See the following article:

https://www.coindesk.com/gold-not-bitcoin-is-drawing-haven-demand-on-us-recession-fears


Now we can argue about the reasons why - but I would suggest that the debacle in December 2017 when people were waiting three weeks for their transactions to be confirmed, really dented bitcoin's attraction to investors.

Recessions usually end up with fiat losing value and when fiat loses value then bitcoin gains value. Now, there is a chance people sell bitcoin to cover for expenses somewhere else but that doesn't mean it will certainly happen, even if some people sell their coins when fiat loses its value and bitcoin gains value there will be buyers as well who would like to take advantage of the situation.

They will want to get out of the fiat world and get into crypto world to make a profit, we have seen that happen time and time again in many countries so even if it happens on a larger country same thing may happen. It is not a guarantee which direction it will go but there is a big chance investors may want to go to gold/silver route as well as crypto which would make their prices go up.

While i agree on points #2 and #3, my thinking is actually quite the opposite on #1 and #4.

1. People will buy more bitcoin during recessions as a way to preserve value. Just look at what happened with Zimbabwe and how people started buying bitcoin as a way to preserve value amidst inflation.
4. FOMO is FOMO, retail investors will have cash even without relying on cheap credit. If there is a FOMO then surely people will find a way to buy more bitcoin.

Dude, I think you are at correct path. I think you draw those scenarios and they are really close to what might happen with bitcoin. What path would be chosen, depend on God only 
I think how strong recession would be, depends how investors and ordinary citizens would do with their investments in bitcoin.
The powerful recession would be, the smaller amount of bitcoins on hands remains.. and lower the price would be .. imo.

I really don't see any signs thats actually pointing to any incoming recession, up until Trump started the trade war with China everything has been going on smoothly and the markets all climbing to unpreedented new heights because the economy has been good. But in the case of a recession, am sure gold is going to sky rocket as it usually does after every financial disaster am sure Bitcoin will end up going up as well.

I think there's a difference in how Bitcoin will be affected with a recession now, and how it would be affected in say ten years' time, when I assume Bitcoin would be a part of everyday life.
Currently Bitcoin is still a risky asset with high volatility. I don't think people would see it as a safe haven against the turblunence of fiat - with the exception of really dramatic scenarios such as hyperinflation and currency collapse.

The future however I think is different. If we assume Bitcoin continues to develop, become more stable in price - or at least more resistant to abrupt changes, then there is every reason to see people in the future flocking to BTC as a more convenient version of gold.

I'm not sure I agree with you. Bitcoin has been through several bear markets, but that is a separate thing from a recession (which means economic activity contracts).

The only recession the world has seen in the last 10 years has been the eurozone crisis of 2011-2013. Bitcoin did well during that period - it was reaction to the Cyprus crisis that helped bitcoin become mainstream.

Bitcoin has been through a recession, that is the part people are mistaking. What you see as "recession" is probably just american recession, if USA has one then all world should have it and you have a point a bit, when back in 2008 USA had it, many countries almost collapsed in economical sense, when they had it in 1987 same happened.

So yeah you are right that USA recession means global recession, however this doesn't mean there hasn't been recession all around the world in the past 2-3 years, look at the world global economy in the past 2-3 years and tell me you are not seeing some bad things going on all around the world, not just known ones like Venezuela or Zimbabwe but a lot bigger G20 countries having economical problems. Bitcoin wasn't phased by it and it still continues to do whatever it always does, go up and down like crazy.

I believe ultimately recession will have positive impact on Bitcoin. Because people will see ti as an alternative money. So far most people see Bitcoin as a get rich fast scheme. Big part of those that own Bitcoin thinks that way. Also big part of people on this forum. Once you see how dangerous is to trust third party to be your bank, you will cherish opportunity way more. And people will do that. Specially those with wealth. The 1%.

The recession effects everybody and everything within the economy and therefore will have a major effect on cryptocurrencies. During this period, economic growth tanks, disposable incomes reduce drastically and many people lose their jobs. As a result of this, Bitcoin is negatively effected due to panic selling that will occur, driving the prices of bitcoin down further when accompanied by the lack of demand, caused by the loss of savings in the economy.

Ultimately, the recession will definitely have a negative impact on bitcoin, however, it may serve as an entrance into the cryptocurrency world for some due to the reduced value of most cryptos. Those who do invest in a recession would most likely see a large increase in their investment after economic growth stabilizes.

Well you are correct that Institutional Investors may choose BTC during recession times as they have been using Gold in the past at such times. However retail investors I think too would try to invest some of their savings into BTC due to the sudden panic that markets would create. Because definitely in such times there would be a few major corporate giants who would flaunt their ways regarding how BTC is great, some people maybe like Mcafee or someone. This will bring some confidence among the retail investor. But unless there is a complete economic meltdown I don't think there is a concrete chance that this thing can help BTC towards greater adoption.

Well, a global recession basically means everything goes to shit, and I'd assume the crypto markets would be full of red as well - decentralisation and it being in a different sector won't really help, and the end of the day, it's still a finance sector and it will go downhill as well.

There is a world though, a very small world where a recession occurs and people look to dump all their money in crypto, which is seen as the safe investment option (sort of like what is happening with Venezuela and their economy).

If a day comes when nations around the world are printing excess piles of fiat in an effort to tax, print and spend their way out of debt. Bitcoin will do a far better job of maintaining its value and stability in comparison to government issued cash, due to it being deflationary.

In past recessions, we've witnessed consumers purchasing big screen TV's, electronics and physical goods due to those things being expected to hold their value better than devaluing cash. Necessity being the mother of all invention, it is possible future recessions and currency devaluation could do more to foster crypto mass adoption than anything we've yet witnessed.

How well crypto performs during recession/depression depends upon policies and legislation adopted by governments.

If world leaders are sympathetic to 99%'ers and wish to protect their economies, they will make it easier for consumers to transfer wealth to crypto in order to preserve their savings. Devaluing fiat can eventually destroy all wealth denominated in it, which can wipe out decades of accumulated savings. If however world leaders want their people to suffer and for their economy to be destroyed, they will place heavy bans on crypto, gold and other assets which consumers utilize to protect their wealth against hyperinflation.

People often cite gold as a good investment during recession/depression. Watching current news, its very common to see banks and governments buying up stocks of gold at an alarming rate. It might be depressing to consider banks/states expecting a big crash in the near future which would explain them cornering the gold market before severe economic downturn sets in.

Bitcoin boomed in 2009 exactly same time when stocks begin his bull run after sell off
Reason of that rebound was massive printing. With tons of printed money emerging markets was going up very fast.But emerging markets and emerging asset were after huge sell off
If answer for recession will be yet another printing then part of that printed money will goes in to btc
But Bitcoin price will rise even without printing because of halving

When the time of recession comes, there will be a variety of change in terms of finance or stock. But it will not have a big impact on crypto currency.

Digital economy is by using crypto currency and not everyone understand that so we need to enlighten people the benefits and good effects of this platform. It takes time and effort but it'll be worth it when they are already knowledgeable about it.

For some people who experience regression, they said that it just a simple conflict but people should think wisely and smart to overcome this kind of hindrance or circumstances in BTC.

Well, it could be positive, in the sense that bitcoin - with the impossibility of creating inflation - becomes the only safe haven, in addition to gold, or goes to zero because there will be nothing left to exchange it with. Certainly, something dramatic will happen.

Come on, guys. Let us be more consistent the next time around and not just post for the sake of posting.

eaLiTy is saying that if there is a major global recession then the entire market will bleed and nothing will escape that. And then he goes on saying that the entire market starts falling. But then he suddenly isolates Bitcoin by saying that Bitcoin is not going to have the same issues as the rest of the market. But then he wrapped it up by saying that there is no safe market when there is a major global issue. This man is joking.

And you are responding with another joke.

Recession is normal. It happens to the market. There is always a cycle in the market and recession is part of it. And even if you wish that it will not happen, it will still happen.

Recession will happen but there will always be recovery that comes afterward.

It is true that capitalist economies have entered a period of arrest every 10 years and have had a heart attack at regular intervals. One of the main reasons for this is injustice in income distribution. Therefore, the capitalist order is doomed to collapse in the long run.
If there is a major recession in the world, the blockchain and cryptocurrencies will prevail.

There are many predictions, some positive, others negative, and some concern a real recession, if not a global collapse of the economy.
But no one knows for sure what will happen, so - while it is important to use caution - it does not seem to me a good idea to be paralyzed and scared.

That's the reason why investors are in a hurry to sell all their bitcoin and with that the market will bleed. I am not wishing that this will happened in the future because a lot of us have been affected so let us wish the recession will not happened. We need to work more to keep the our economy goes up.

Not so sure about that assessment. Satoshi was probably the only miner on the network when the 2008 recession officially ended. By the time Mt. Gox launched in mid-2010 and efficient price discovery began, the recession was way in the rear view mirror:

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.

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.

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.

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.

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.

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.

I hope this does happen.

I'm prepared for both outcomes though.

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.

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.

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.   

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.

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.

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.


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.

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.

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.

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

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/

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.

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.


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.

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?