Will the upcoming economic crisis destroy cryptocurrency?
News outlets have published disturbing articles about alleged next year’s economic crisis more and more often lately.
Several macro indicators — such as yields on American bonds and activity level of financial consultants, who are reconsidering investment strategies of their clients — states that there will be one.
Trump still has been accusing China, which does no good for strengthening of the global financial system.
It seems that everything has been fine for too long, and the crisis is quite possible.
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Of course, no one can say for sure when the crisis will come, how it will look like, and whether it will happen or not, but one fact is absolutely clear: the holders of any assets would like to get ready for it somehow. And people storing a significant part of their savings in crypto are no exceptions at all.
Is it better to stay in or to get rid of crypto until it’s too late?
To begin with, the current situation is unique — it will be the first crisis since the inception of cryptocurrency. Although, the creation of bitcoin is connected to a crisis, the one of 2008. Bitcoin became a challenge to financial tycoons whose lack of accountability had threatened the lives of people around the world.
The author of Bitcoin, whoever it was, had decided to give people a currency that has no risks of the previous financial system. But yet there has been no chance to check the efficiency of its features on a real global battlefield.
So, what can happen to Bitcoin and other cryptocurrencies after a possible financial fever?
Will they reborn and become even tougher or fail and disappear?
The point is that no one can provide even a hypothetical answer. Until cryptocurrency remains its crisis virginity, there is no data for objective analysis or extrapolation.
On the one hand, Bitcoin is called a new gold. On the other hand, Bitcoin shows extreme volatility, which is a contradiction to the word “reliability”.
The traders are divided by their sentiments into two almost equal parts: optimistic bulls who expect Bitcoin to surge in the case of a crisis and pessimistic bears who, on the contrary, expect the fall.
However, it is obvious that both types are optimistic since both of them expect benefits from the scenario. Thus, it is hardly worth relying on the sentiments of traders while evaluating the risks.
Much depends on public opinion. For the last ten years, none of the cryptocurrencies, including Bitcoin, have become widespread.
Bitcoin still cannot be used to pay purchases in a shop, with few exceptions, — even Starbucks that had written its name into the list of progressive companies accepting Bitcoin, crossed itself out shortly after this — sites are also reluctant and prefer dollars and euro.
On the other hand, the number of those who believe in cryptocurrency is increasing. The current capitalization of Bitcoin, which is almost as big as capitalization of a world currency, is such only due to those believers.
And finally, it’s yet unclear whether cryptocurrency fallows the main trends or remains in opposition to the traditional financial system.
Regarding such a controversial potential of Bitcoin, the possible crisis and subsequent reformation of the financial system can become either a plunge into the abyss or a springboard for unprecedented growth for the first cryptocurrency.
It looks as though the evaluation of risks regarding cryptocurrencies today is pointless. None of the types of assets today has such a high unpredictability index. You can either lose everything you have or multiply your investments drastically. And no one knows which option is more likely.
The current situation resembles a Schrödinger’s cat of finance: if the crisis is inevitable, cryptocurrency is either already dead, or very much alive.
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