The global recession of 2008 was the scariest dream of the world economy when bankers became poppers within a matter of hours, and the entire market collapsed. After more than a decade, the shocks of recession are still felt in some sectors, and therefore, the thought of another one sends chills down the spine of investors.
Current Economic Scenario
Economists worldwide have stated that there’s a global economic slowdown, where major markets like the US, China, India, the UK, etc. have shown reduced growth in the last couple of quarters. Additionally, political conflicts like the Sino-US trade war, and the Brexit fallout, have further increased tension, as the negative impacts have become more than apparent, with various sectors, like FMCG, Automobile, Agriculture, etc., which have registered negative growths.
This has resulted in a severe impact on Stock Markets, right from Wall Street to Dalal Street. In India alone, more than 1400 stocks registered their 52 week low in August, and over 85% of the companies with less than $150 million cap lost 50% value from their all-time peaks. This has shooed investors away from the market, which is further adding to the slump.
Crypto Moving In Contrast of Expectations
It was always touted that cryptocurrencies would be a protection from the loss of wealth during recessions and slowdowns, but whether these expectations have stayed true is a question we have limited answers at the moment. However, on the face of the matter, it looks like decentralized currencies have also been severely impacted because of the growing economic slowdown, with the apex cryptocurrency, Bitcoin dropping from $20,000 peak in December 2017 to just over $3,500 in January 2019.
What’s interesting, though, is the rise of BTC between February and August this year, where the token’s value increased by more than three times to $13,500. This recovery came at a point when other investment assets except for gold, like bonds and equity, kept declining. Hence, it can be safely concluded that the reason for a decline between January 2018 to January 2019 wasn’t due to the recession, but other factors, which are market-specific to decentralized currencies.
Why Is Bitcoin The True Indicator?
Since August 2019, Bitcoin has again gone on to fluctuate between $10,000 to $12,000 for many weeks and has recently come down to less than $8,500, which still is more than double of what it was in January. Industry experts have predicted that the market is undergoing corrective measures, which will lead to a stable price point, from where the token will see a steady and gradual rise.
Why only Bitcoin, and why not any other token? Well, that’s almost like asking, “why the US Dollar, and why not INR or KWD?” Bitcoin is the apex token and the one with the highest value, bot in terms of price and market cap. It is also the most traded cryptocurrency and is backed by major investors. Even the staunch supporters of crypto, like Max Keiser of Heisenberg Capital, Michael Novogratz of Galaxy Digital and the former Goldman Sachs partner, and computer scientist John McAfee, have stated unanimously that Bitcoin is the only crypto which is the true store of value, while other tokens will develop on the bases of their utility. Therefore, it can be safely said that if crypto can be a safe haven for storing wealth, it must be stored in the form of Bitcoin.
Can Bitcoin Be The Last Resort?
After considering the factors mentioned above, the question remains, whether one must park their wealth in Bitcoin instead of traditional assets. The answer to this question depends upon the factor, whether the goal of the investors in the short-term or long-term. In short-term, investing in Bitcoin may not yield desired results, and in such cases, the outcome might be disappointing.
However, if investors pour their money in Bitcoin with a long-term perspective, results will most certainly be fruitful. Yes, Bitcoin is a volatile asset, not denying the fact, but it’s also true that it recovers sensationally almost every time. Therefore, in the long run, Bitcoin can give positive returns, while also saving your wealth from depletion. While the estimations that crypto promoters give of million-dollar price tags might be too optimistic, crossing $30,000 in the next few months cannot be ruled out.
Especially when countries with souring ties with the US like Russia, Turkey, Venezuela, China, etc. are looking towards crypto for surpassing sanctions, demand for Bitcoin as a reserve currency is all set to grow. Therefore, those who think that Bitcoin will help them buy all the luxuries of the world must wake up, and those who want safety and security of their wealth must definitely trust crypto, and for an extended period.