Topic: Will the next economic crisis in the world instead cause financial inflows into (Read 507 times)

The pandemic has been a gigantic test to almost any industry out there and I think we can safely claim that bitcoin passed that test, at the beginning the price of bitcoin went down as people were afraid of what was happening and no one knew how bad the pandemic will be but even then the price of bitcoin recovered relatively quickly and we reached several all time highs when many other industries were in shambles.

This show us that the ideas that we have about bitcoin becoming a store of value are not wrong, it is true the volatility can still be extreme but even at its lowest point during this year bitcoin was still pulling off a 5x from its low point on March last year which is way better than what the rest of the assets around the world were showing up at the time.

In any financial crisis, fiat money is most often devalued, which is why literate people are looking for how to save their savings, bitcoin in this regard will be the best asset, so bitcoin will confidently keep the bar in a crisis.

Bitcoin adoption have been increasing with time. During the earlier financial crisis people weren't much aware about the existence of cryptocurrency. Last two year almost every country has been experiencing hard economic situation. By that time the market of bitcoin was found strong. This is all because of the understanding of people about bitcoin.

As a way to secure the earnings people got into bitcoin. Now when situation is getting on track people started to sell the holding to make their next move. So, economic crisis makes inflow and outflow of money based on the level of acceptance bitcoin has got by that moment.

Yes of course, because bitcoin will be at advantage due to it's a digital currency, observing any digital currencies in another form, it's obvious that an economic Crisis only affects those things that are of physical and controlled or managed by a sector, so relating cryptocurrency to economic problem to a particular country or worldwide evaluation of crisis, now when economy is not suitable it causes unbalance to the country or lack of finance....but with cryptocurrency, especially bitcoin the values of your money will still remain constant.

I stand corrected, yet I still think this is not such a good idea, a world dominated by the US dollar has been bad as they have abused their position of power at every single opportunity, but a world where the Chinese currency takes its place seems to be even worse to me.

After all the Chinese government is also a currency manipulator and I am not so sure other powerful countries will simply accept this instead of trying to impose their own currencies as the new standard for the world, all in all interesting times are head of us and I will hold my bitcoin as a way to protect myself from this.

Even the smallest investor could find 20 bucks to invest but that is not the point. I do agree that people do flee to bitcoin at all times, not even just during crisis but every single time and that means that there is a good chance everyone who has few hundred to thousands of dollars people do end up putting in a lot of money into crypto, so that is why I honestly do not think that we should be focusing on bitcoin as of right now, but more towards the crisis in that situation. What does that mean? What kind of crisis is this that we are talking about?

2008 was a manmade crisis that caused a lot of people to lose money, but it was basically all digital numbers, this past year however is a crisis based on a virus, which is totally different. There are different crisis causes and each would lead to different result if you ask me, that is why there isn't one correct answer.

A lot of investors flee to bitcoin when they knew that bitcoin was maintaining even while all the other assets are still crashing that is how the $60K bull run was started then later an average man also started to accumulate as much as bitcoin but many of them entered too late which is a common mistake done by a common man at the time of investing. When someone wants to make money then they need to invest when it at its red trend then they can reap when the price changes to green trend.

You just repeated what I said, so you obviously got my point. Interestingly, a lot of people think that during a crisis people flee into Bitcoin, but I fully agree with you that during a crisis most people don't have anything available they could liquidate and put into Bitcoin. The rich guys, yes they are very well positioned to even buy the Bitcoin up that others are forced to liquidate, but the average person is trying survive rather than gambling on cryptocurrencies. That was my point. That is also why Bitcoin will not explode during a crisis. It might though if we are talking about a hyperinflation crisis.

When there's a possibility of that scenario, global economic crash will tend to crack down all business related to money. Stocks and other particular exchanges will be crashed down toward cheaper value and eventually be dead of can't handle to crisis. With bitcoin, it's expected to go down along with other cryptocurrency altcoins, but by the time recovery phase goes back I think it is still dependent with normal fiat economy. Investors will not go back immediately, because they're having hesitations because of the previous world crisis.

Actually, I don't get your point.

During pandemic people won't have money to invest on assets because they are looking to spend on their daily needs over future assets so there are certain class people who have millions already sitting in their bank account and still got money in their hand will take this as an advantage and make more money as much as they can by investing when the price is at the lower level.

I'd expect BTC to move in tandem with the rest of the asset classes during the crash, but rebound much more strongly after the fact.

As we saw during the COVID pandemic, BTC initially was panic sold all the way down to $3k but recovered to all time highs after stocks started to rally.

With inflation sky high right now I really do think that it is a matter of time before people start looking for safe haven assets. Gold is too clunky, so BTC is likely going to receive a lot of attention on that front.

Btc would probably face more difficult times to recover once an economic crash come at worst point like in a war or another pandemic which is really scarsh than covid-19. People nowadays was too fascinated with the news, and every updates being published on internet they affected a lot based on their emotions which also a big factor to cause panic. So then, if there's a possible trigger point that will initiate, investors will dump their btc quickly out of panic.

Actions say otherwise -- a huge part of the pacey development now going on in Africa and in Southeast Asia (possible South America too but I don't know enough) is Chinese money. Highways, skyscrapers, public transport, utilities -- I've seen myself swathes of land being developed at breakneck speed all taking on yuan injections. A digital yuan would cut down on friction and I think commerce-wise, developing economies would welcome yuan-based exchange, loans, invoicing... instead of US-based at the moment. The banks and central banks would be doing those currency baskets (and already are) but B2B is where China's prepping their muscles for flexing.

I do not know if other countries are going to be that happy to let the Chinese to have even more power over them, I think it is way more likely that we go to a system of basket of currencies in which instead of having a single currency being the unofficial currency of the world, as it is the case of the US dollar at the moment, we will have governments holding the currencies of several other countries.

However this will make the economy even more unstable and I would be not surprised if such system does not last for long.

Yes and the covid pandemic has proven this because at time of despair and people losing a lot of money they have invested in Bitcoin. Bitcoin reached its highest ever price during a pandemic which was ravaging the whole world and causing hefty medical bills and putting people out of work. Yet Bitcoin is what they turned to.

Bitcoin could also crash of course. It would certainly crash if it's in real bubble territory and everyone fears liquidity will dry out. Apart from that it could also certainly be a safe haven and not move much. What I don't believe is that it will go up because honestly there aren't many people during a crisis whose tendency to invest increases during such times.

Lets take covid crisis as an economic crisis then we all knows what happened to the stocks, gold and cryptocurrencies. As immediate effect every asset value fell but in no matter bitcoin started to recover and start gaining attention as well so that we reached over 60k as result.

We still don't know though if bitcoin isn't going to be dragged down by this collapse though but I am a firm believer that we will see it as a hedge by many people that sees bitcoin as it is which is a shield for collapse and inflation.

Bitcoin has the attributes of security and decentralization. Even if there is another economic crisis, it will continue to operate without being disturbed by the crisis. When the epidemic first broke out in the United States, the unemployment rate increased significantly, and the number of people in the epidemic continued to increase. In this scenario, Bitcoin would choose to realize assets instead of buying Bitcoin. Therefore, Bitcoin is developing well, but the market may also decline.

for me, probably if global economy will crash, crypto space will remain fine in my opinion , because they are not connected and no one can control digital currency unless if they ban mining activities because it always made an impact in the market.. And you know there's a possibility that people will going crazy to grab digital currency if that time happens because there's a big differential when it comes to prices, and in fact digital currency is so high tech and become very useful nowadays even some government are against.  So there will be a chance to replace fiat into crypto as it can be use as well like a real money in my personal opinion.

A few months ago I assumed that once covid was gone, which it pretty much is in most of USA then the world would get back to normal. No more printing and stock markets and crypto would pullback. However not really seeing that yet. Stock market keeps making new highs. People not wanting to work. Everything being expensive like cars and houses. Even luxury clothes or handbags having lines full of people. When will this end?

I don’t see it going on forever. Market needs a correction. Maybe when Fall comes and we are a massive correction in the stock markets we will finally see some pain. But right now markets keep going up and up and nobody knows when it will get in with reality of how the world works.

     Such circumstance when an economical crash or a world scale financial crisis happens is not that out of proportion. Even with just a few months of being immersed in the covid-19 pandemic, lots of people have already been looking for other alternatives to earn money or save their assets from the effects being made by the global pandemic. Even more so as the duration of the pandemic got longer and longer. I say this since lots of people I know personally have started venturing into this industry and even going as far as investing in crypto related games. Their reasons? They need an alternative, can't stay idle and unable to provide for the people relying on me and so on. Still though, we cannot be sure about anything yet since when jobs or other ways to earn money are scarce, how the leaders of a country react to such phenomenon would be the only thing that can give an insight to everyone on what may happen next.

But you are leaving out the most important part, if we take a look at what happened during the crisis caused by this pandemic we can see that there was in fact a crash but after it we saw a meteoric recovery, and it is not difficult to guess that something similar will happen the next time there is an economic crisis, the fundamentals of the economy are bad, there are raising prices, unemployment and many small businesses are disappearing, if that was not enough countries are heavily indebted and consumer spending is low, this tells me a crisis is coming and when that happens people will do what they can to find a way to protect themselves from it and bitcoin will be there to help them increasing its value in the process.

In my opinion if global economy will crash definitely Bitcoin and other crypto will crash too, and i think it would be hard for Bitcoin to recover cause will priorities their basic need rather than digital assets.

Didn't all the markets grow that impressively because of all that quantitative easing? That is why everything right now feels a little bit (or even a lot) bubble like. All the money the people received seems to be flowing into markets as everyone wants/needs to make a quick buck and the greenish markets looked like the perfect opportunity for that. If there is no such quantitative easing after another crash, do you think Bitcoin would go up again the same way it did this time after/during the crisis?

I would assume that just like in the pandemic crash of 2020 march, we will probably see bitcoin crash with everything else for the immediate reaction, however afterwards we will slowly grow bigger and bigger, that looks like a possibility to me.

I understand that it doesn't really sound like something that will happen very easily, but the idea that we should see bitcoin rising after a crash is something everyone agrees with, bitcoin is anti-inflation and crashes usually cause governments to print more money and when that money is printed then it becomes less valuable causing bitcoin to go up a lot bigger. That is just what I "assume" will happen but it is not something that we faced all that much, so far we only had one crash since bitcoins creation and it happened this way, doesn't mean that it will happen that way at all times neither.

Which should negate most of the world's economies (which is why the majority of developing economies chose to ignore it because if they had just stopped imagine how bad their systems would crash).

It's unbelievable to see mega corporations and MNCs just go bankrupt after one month of not producing or working. Imagine how much more worse for poorer economies with less resilient structures?

On point and a wrong belief that many have. Bitcoin won't just rise because we have a crisis. A crisis is a crisis and it deserves its name for a reason. Assets decrease in value, people lose their jobs and are out of cash. The last idea you are most likely to get during a severe crisis is putting the last pennies you have left into Bitcoin. You would rather be happy to have Bitcoin and sell it.

The economic crisis should be good for Bitcoin. The economic crisis is caused by the government messing up monetary and fiscal policies. Economic crises often lead to inflation, paper currency will depreciate, and Bitcoin will not be affected by state control, and its value will rise. To solve the economic crisis, it is necessary to return the monetary power to the market. Bitcoin has the characteristics of decentralization and is not controlled by the government and the state.

Bitcoin itself depends on the market, and the market determines that it is greatly affected by funds. When liquidity dries up, no economy or finance can easily get out of it. But I don't think the global economy will collapse completely and easily.

I think that when the next economic crisis occurs, Bitcoin should have more advantages than disadvantages, because during an economic crisis, money will depreciate and no longer be valuable, but Bitcoin will not. The more legal currency depreciates, the more Bitcoin rises. The space will be higher, thus reflecting the value as a safe-haven asset.

I don't actually think so, or it'll be possible only in countries with a viable economy pre-pandemic, I think for countries that were already experiencing inflation and hyperinflation, coupled with a struggling economic situation, the pandemic only made their case worse and they would not be getting out of this mess anytime soon, for countries like the U.S or China, they would experience inflation no doubt, but I expect measures to be put in place to curtail it sooner rather than later, but the same can't be said of some developing and underdeveloped countries.

I think we saw what could it happen with the economic crisis that we saw that was caused by covid during last year, at the beginning there was a panic and people sold their coins creating a crash, but then after the people began to think clearly again they realized that bitcoin was their best option and we saw a huge deal of money coming to the market, this is more or less what I would expect on an economic crisis except that it will be even more extreme if such crisis happens because fiat currencies became unstable.

Are you talking about the post-pandemic era?
I actually expect the global economy to recover pretty fast after the pandemic is over.There will be high levels of inflation,but sometimes inflation can a serve as a booster of the economic activity.I'm sure that the central banks will find a way to put inflation under control.
What will happen to Bitcoin?Well,I think that Bitcoin is still bullish in the long term.It doesn't matter if the global economy begins a new era of rapid economic growth or we face a sudden economic collapse after the pandemic.
In both cases Bitcoin will be a desirable financial asset.

Bitcoins first recession was during the covid stock market crash of March 2020. People were assuming that everybody would sell stocks and all their possessions for Bitcoin and the reverse happened. Basically for a long time Bitcoin was highly correlated with stock indices.

So Dow Jones goes down.... Bitcoin follows.
Dow Jones goes up... Bitcoin follows.

So if there is another recession, most likely the same will follow suite. Everybody will want to be in cash. So if it happens stocks will drop, and Bitcoin will follow.

Will there be a recession? Very hard to say since the last one happened about a year ago. Seems too close however the markets always have surprises.

As other have said, this is hard to predict. The last covid crisis, we have seen bitcoin going down very hard as well and so is the other assets. That might be the initial reaction though as after everything has settled down, the price of bitcoin recovered and bounce back and hit another all time high.

But we can't say that bitcoin is designed to be a hedge against economic crisis, it is very volatile, investors or at least the rich prefer assets that are steady and a good store of value such as gold.

A lot of fiat based investments are going to collapse and the prices of crypto are going to plummet because some people will try and evacuate their money not knowing that their money is much safer in there since it's being hedged in inflation. I don't think that it will be beneficial to crypto that there's an economic collapse that's going to happen.

I believe that if the next economic crisis comes soon, the same thing that happened in March 2020 with the COVID would happen: people got scared and started selling massively to obtain liquidity. This affected all assets, Bitcoin included, and I think that's what would happen now. Another thing would be if it takes a bit longer to happen and Bitcoin is more clearly established as a store of value. In that case I think it would happen like it used to happen in the old days during economic crises with gold, people would buy gold to protect their wealth.

I can only guess. There are only two scenarios though. One is that Bitcoin will soar high given that the global economy is primarily based on the traditional system of which Bitcoin is not a part. Or two, it will also crash along with the economy given the possibility that a global economic crash would mean people are losing jobs, other sources of income, money, etc that they need to sell their precious Bitcoin to continue keeping their ability to purchase goods and services.

Covid was a big event but the monetary base was diluted during that also which has inflated all prices.    Thats not the full cycle or a proper downturn, inflation and weak monetary standards ultimately lead to reset and deflation which can be destructive to various sectors and the economy generally.   The current policy thinking is that its better to continually provide cheap money via debt and avoid any pull back in pricing but its likely wrong long term as the debt loses value vs real world costs.    It will collapse or reset eventually, that will be the big test for crypto to experience the ending of a major FIAT standard or debt default of a country a bit like Greece but likely a far larger one perhaps Italy etc.

I think the covid19-caused economic decline can already qualify for an economic crisis in Bitcoin lifetime, so it's better to say that Bitcoin has never seen a major global economic crisis. We saw Bitcoin taking a heavy hit from the initial shock, meaning it's currently not a true safe haven asset. But then came a quick recovery, and for some time Bitcoin seemed to not be correlated with other markets. Then the bull run sparked from institutional fear of US dollar inflation, and now that this fear has been reduced Bitcoin is on decline, though in larger picture it has gained a lot. But there is no rule that says that Bitcoin must behave like that during the next crisis.

the last economic crisis was the housing market
the next economic crisis is obviously the pensions

so knowing pension funds CANNOT just hoard bitcoin
(higher standard of investment regulation: insurance: audit: checks)

so what they will do is people will lose interest in the fiat portfolio pensions. (fiat pension crisis)
and instead use bitcoin ETF portfolio as their value store/peg of pension funds

its why so many companies are spending billions trying to get first acceptance of ETF rather then just hoarding coin for coin trades

once one ETF is accepted and regulated. the others will take that application template to get their own ETF set-up
and then they need to buy bundles of bitcoin to be their bitcoin ETF collateral to then offer their ETF shares to investment companies that only trade with other regulated companies

If it really is a global crash then similar to the start of Covid, all the money is going to flow out as people get scared and run for the hills. While Bitcoin did bounce back this time so did stocks. However I am not sure that Bitcoin would do as well in an economic crisis situation that is more prolonged (like the subprime mortgage crisis where huge amounts of jobs were lost and it created a vicious feedback loop). Everything dropped very rapidly at the start of Covid but almost everything bounced back within a few weeks - barring a few of the worst affected industries like hospitality. While Bitcoin has attracted a lot of money and is on its way to becoming a "safe haven", it simply does not have the decades of historical precedence things like Gold can offer.

Very much possible! During the last prominent economic crisis,  we didn't have the option to move to crypto. So most people had moved to so called safe heaven like Gold or other precious metals. Historically, gold has been used as a safe heaven during any financial crisis. I don't think this trust on gold will not end anytime soon and will continue even during the next financial crisis.

But this time, we have cryptos! So its no wonder that a lot of people will flock into crypto market during uncertain times. However, such incident will definitely increase its adoption as well as the price. But considering the price of bitcoin is so volatile, it may scare some people out of the market. Because a safe heaven usually stays stable uring bad times. Bitcoin has not yet shown such resilience and maturity. So a major impact may not happen!

so if that happens only gold will save finances when the global crisis hits all corners of the economic sector.
but so far, after a fruitless trade war dispute, some possibilities are very unlikely. facing a global crisis is a terrible thing including for Bitcoin. because who will calmly hold it during a global crisis other than the resilience of values ​​that can really fend off inflation.
the dollar was definitely ruined, and all the paper money was useless.

I agree, BTC going into an economic frenzy is something that hasn't happened before and it is only a matter of guessing what it may look like.

Initially, the price drop might lead to many people liquidating their positions, BTC will then reach a price where only a small minority will buy in (similar to how it was in 2009/10). Though whether this is something that can happen it's all dependent on market sentiment and how people view the space. As we see it today, with many more investors thinking of BTC as a gold-standard the above scenario might not play out as dull as described.

People probably won't care about currencies once a economic collapse happens and by that I mean a complete economic collapse. Bitcoin, fiat and other cryptocurrencies will be treated the same. All faith will be lost in money for a while and there will probably be attempts made especially by cryptocurrencies to become the new mainstream currency used after the event but it would be more probable that people revert to trading things rather than using any money type system.

The ones flocking now will be in a better position, when/if such a crisis hits, its already too late.

Transitioning from the debt based economy to the savings based economy won't be overnight, and many things will change. No, you don't get in debt in invest fast and earn fast, you save first, then use those savings to invest. Slower, but safer. Read the Austrian school of economy to get an idea on how this works.

In addition, money that does not lose value overtime, doesn't need to go into banks, that becomes optional. So instead of being desperate to invest in whatever (which might fail) you will simply save it for when its really needed. You can kinda experiment this in some online/solo games where their fake money keeps the same purchasing power overtime (many MMOs actually have inflation so this doesn't apply to all).

The mindset of some people will have to change, at least in the countries that heavily promote getting in debt for things. Some cultures actually already practice saving before buy. So spend 20 years to buy your house, instead of getting in debt now and keep paying it for 40 years, that kind of thing.

Yes you can still do that, but its optional. Lending or getting in debt, but at least it cannot be done with fake money anymore as its done today with fiat, the so called credit expansion using money that does not exist anywhere. Especially when they give you the right to take out your money at anytime in spite of being lent to someone else; because fractional reserve is magic (legal ponzi scheme done by modern banks).

There's already one brewing (or happening already for some countries), I still think pandemic-induced contraction will only be felt in the coming years. The last big one a decade ago got band-aided by debt relief and more money printing, which is really the same tactics used by central banks now. It'll still be a while before the banking system collapses but it won't be until China really flexes its muscles that we'll see real moves taking place.

IF the US dollar is to be thwarted, it needs to be replaced with something. Yuan is the likelier displacer, though, not Bitcoin.

Bitcoin's condition is very bad due to economic accidents so we have to work patiently. Many people sell bitcoins at a low price due to accidents. I can say that those who do not need more money would be better if they do not sell bitcoin at a lower price because if the situation in the future economy is good then bitcoin price will increase then if you sell it then good profit will be available.

We can only assume what will happen with Bitcoin in case of major economic crash, but it will most likely follow other assets and price will crash in beginning.
As long as people are running nodes and miners are working, everything will be fine in long run but be ready for some turbulent times ahead.
Real chaos may happen in case we don't have electricity for few months but this will not only affect Bitcoin but all financial sector, so useful items like axes and tools may be very valuable.

Look at Cyprus in 2013, exchange controls etc. Look at the totalitarian takeover of Hong Kong, and Venezuela, if bitcoin had been around.  Smart people will have some of their assets in a portable, non-censorable asset like bitcoin to protect themselves and provide an escape hatch. The people of Taiwan should have some now after they have seen the destruction of liberty in Hong Kong.

Bitcoin will do just fine and survive.  Who knows about the fiat price, of course, but bitcoin itself will be fine.

Your guess is just as good as ours. Bitcoin has never been through an actual economic crisis in the past so all we can really do right now is speculate.

There are only 2 scenarios that could happen in the top of my head:

1. People flock to so-called "safe haven" assets such as gold and bitcoin.
2. Bitcoin holders sell their bitcoin just so they have enough funds to survive.

Make your pick.

What is likley to happen to BTC in the imidiate aftermath of a global economic crash, and what will a recovery look like in comparison to the economy?