Will Bitcoin boom during a global recession? Crypto leaders weigh in

Bitcoin Hash Rate Reaches New All-Time Highs Nearing 100 Million TH/s

Around the world, financial markets are bracing for a predicted global recession. We asked top blockchain leaders what they think will happen to cryptocurrency if a downturn occurs.

Spoiler alert: Good times ahead for Bitcoin if the economy goes bad.

Storm clouds are gathering around global financial markets, with stock valuations and real estate prices propped up by historically low interest rates.

A survey of 200 major financial institutions by Absolute Strategy Research last week put the risk of a global downturn at the highest point for four years. It puts the chances of a global recession in the coming year at 45%.

In the US, fears are growing that the record 121 months in a row will soon come to an end. It’s been the longest uninterrupted period of growth since records began in 1854.

But the US-China trade war has seen the OECD, IMF and the World Bank all downgrading growth forecasts for the coming year and non-financial business debt is at an all-time high of 74% of GDP.

The Guardian reports that Britain is now facing the highest risk of a recession since the Global Financial Crisis, thanks to Brexit and the global economic slowdown.

And in Australia, growth is the lowest it’s been for a decade at just 1.8%. Economists have forecast an anemic inflation rate of just 1.5% this year.

Micky takes the pulse of blockchain leaders

With that in mind, Micky got in touch with blockchain leaders around the world to find out how they see a potential downturn impacting Bitcoin and cryptocurrency.

Leigh Travers, CEO of the ASX listed blockchain company DigitalX, believes a recession could boost Bitcoin’s fortunes.

Leigh Travers, CEO at DigitalX
Leigh Travers
CEO at DigitalX

“It seems pretty clear that investors are bracing for a low growth environment so are betting on stocks with high growth prospects and driving up their valuations,” he said.

“To hedge that portfolio risk, they are also diving into bonds that actually helps to further drive up the valuation of the market.

“Rather than buying into negative yielding bonds or a stock market near record highs, investors should also consider Bitcoin, it’s proving to be a safe haven asset and was designed for exactly this fragile economic climate that is giving our RBA sleepless nights.”

Bitcoin is an alternative asset class

Marcus Lim, Singaporean entrepreneur and founder of the digital asset trading platform Zipmex, agrees that cryptocurrencies operate as an alternative asset class and will, therefore, benefit from a correction.

Marcus Lim
Founder and CEO of Zipmex

“Bitcoin was born out of the GFC representing digital gold, so we could see the increase in value for Bitcoin as a result of Australia’s anticipated stock market correction; there’s the potential for this to lead to a boom in digital asset trading across crypto exchanges,” Lim said.

“Cryptocurrencies could alleviate some of the financial pressure on traditional markets as they operate as an alternative asset class.”

More Power for Bitcoin

Chair and co-founder of Power Ledger, Dr Jemma Green, predicts that a recession wouldn’t affect market demand for POWR, which is used for the trading of energy.

But she said that as Bitcoin was developed as a response to the GFC, it should benefit from traditional financial market uncertainty.

Dr Jemma Green, Co-Founder & Chairman Power Ledger
Dr Jemma Green
Co-Founder & Chairman Power Ledger

“A lack of positive sentiment in traditional assets could result in an uplift in crypto assets as a viable investment, particularly considering the recent market value increases in a number of major coins,” she said.

But Green also sounded a note of caution over the threat of increased regulation of cryptocurrencies in the US – one of the major markets.

“Sanctions limiting the use of cryptocurrencies in the US might impact investors – they could find it difficult to invest under current legislation if the government doesn’t find a way to integrate the new asset class. There’s that saying; innovate or die.”

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