Bitcoin, on the wire – L’ecollapse of the Terra blockchain caused a decline in large portfolios towards the dollar. This internal crisis in the blockchain ecosystem took Bitcoin under the $20,000 and Ethereum below $1000. To this internal crisis was added inflation, which ignited, taking the king of cryptocurrencies to the hell of the markets. The ingredients of the economic recession are then united. Bitcoin is facing its first economic crisis.
What is the economic recession?
To better understand the context in which Bitcoin, the king of cryptocurrencies understand what economic recession is. In short, a country’s recession exists when its economy suffers a gross domestic product (GDP) negative. The consequences of periods of economic recession on our societies are:
- rising unemployment;
- decline in retail sales, production and supply;
- a drop in purchasing power for households;
- rising prices and rising inflation.
During a period of economic recession, global banks have an aggressive response as a defense. They tend to raise the rates. We can take for example the Federal Reserve, which has raised rates to defend against inflation.
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Bitcoin in the face of the crisis
The collapse of Three Arrows Capital (3AC) is the example of large hedge funds that did not resist the fall of Bitcoin. This ice age also announced the beginning of difficulties for other platforms such as Celsius or BlockFi.
Cryptocurrencies then collapse in a context complicated macroeconomics and an international political and diplomatic situation that hurts Bitcoin miners. Indeed, the energy crisis caused by the war in Ukraine associated with the Bitcoin’s fall not helping the mining industry who is forced to part with his BTC.
Faced with this situation, predictions on the value of Bitcoin are going well. $0 for some, $10,000 for others. Bitcoin detractors even meet for conferences: it is the birth of a heybby anti crypto. Bill Gates meanwhile declares as fool those who own cryptocurrencies.
Is Bitcoin dependent on the economic crisis?
However, given the definition of Bitcoin in its nature, what is the real impact of the economic recession on Bitcoin? The answer to this question may seem complicated from the outset, however, two parameters can offer us some food for thought.
First of all, the context of the creation of Bitcoin. Its creator, Satoshi Nakamoto, created the king of cryptocurrencies in response to the 2008 economic crisis. Bitcoin then had the role of being a safe, immutable value, independent of any banking and monetary system.
Then, investing in Bitcoin no longer has the same meaning. Human nature dictates that investors turn to safe havens as dollars or gold in times of economic crisis. Nevertheless, the progress of theadoption of cryptocurrencies and blockchain changes the situation.
Finally, Bitcoin’s reach is no longer the same as it was 10 years ago. Bitcoin has already shown evidence of its effectiveness. It is for some a safe haven. From the Sunday holder to Michael Saylor, many are those who “buy the dip » (buys in the dip). However, these Bitcoin supporters do not seem mobilized enough for the value of BTC to increase.
If history repeats itself, the king of cryptocurrencies is going through its 6th bear market, each of which led by a bull rally that led higher than the previous top. You don’t have to be naive though. This period of economic recession has consequences for the value of Bitcoin. This does not mean that BTC is falling because of the recession, however. However, the behavior of sellers has repercussions on its value. The latter are sometimes locked into mainstream thinking that demonizes cryptocurrencies to better hide the consequences of the recession. Bitcoin, on the other hand, remains free, constant and unperturbed.
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