The world is heading into a recession and many causes and symptoms may lie behind it but they all show that the global economy is fragile with all countries being affected by one another.
The economic turmoil caused by COVID-19 may be enough to bring down many physical retail oriented businesses and highly leveraged companies. It could be a trigger that removes some confidence in the financial system as a whole.
Bitcoin was designed to work without the need for governments, banks, international currencies and whatever is needed for traditional fiat money. It is now entering its first major global crisis that is without precedence over the past few decades.
Many people argue that Bitcoin can’t be a store of value because it is so volatile. For many investors, it probably won’t be the first option in these times. However, the concept of Bitcoin as an alternative store of value has already been seen to work in countries that experience harsh financial troubles. The adoption of Bitcoin in Venezuela as an alternative method of trade during hyperinflation shows what could happen in other parts of the world if the recession hit very hard.
Despite a recent price crash, investors in Bitcoin don’t see a lack of confidence in its ability to work as a medium of exchange. Its decentralized and non-inflationary nature could trigger an upcoming rally due to the potential impact of the current crisis on financial institutions and the governments’ ability to sustain fiat money credibility.
Bitcoin of America is a virtual currency exchange registered with the United States Department of Treasury. It operates directly with digital currency users through a digital platform. It has many Bitcoin ATM kiosks. You can use a Chicago Bitcoin ATM to easily buy or sell Bitcoin.
Exodus into safe havens
When a recession impacts government-issued currencies and their purchasing power, people often buy real-world assets like gold. Precious metals have historically been a safe haven in times of economic uncertainty. Investors flock to safe-haven assets because they are fairly resilient to fluctuations of the international monetary markets.
Many crypto advocates are hoping that recession will push cryptocurrencies into the mainstream. So far, Bitcoin has shown some of the characteristics of gold, which is the ultimate safe-haven. If a recession is caused by a loss of confidence in the U.S. dollar, cryptocurrencies like Bitcoin would likely be welcomed and pushed as an alternative to the dollar.
A hedge against micro-economic meltdown
Many people would like to believe that cryptocurrencies could be an ideal disaster asset. There are two aspects to consider when looking at digital assets within the context of a potential recession. Decentralized currencies aren’t linked to the credit quality of underlying sovereignty like fiat currencies. Secondly, accelerated adoption of blockchain technology could improve the transparency of securities holdings.
The real economic impact of the current crisis is yet to be seen, and it is hard to predict outcomes. Looking at the global economic situations, there are certain factors at play that could be beneficial for Bitcoin. There is some uncertainty about the halving of the price and the health of the network overall but Bitcoin is sure to get through this.
Economic crises tend to present buying opportunities across all asset classes and there is money to be made in the days ahead. Contrary to the belief of some, the upsides of Bitcoin could make it a safe investment. Those who don’t buy as much Bitcoin as they can but invest a small amount of their portfolio could benefit.
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