June 19, 2024

Copy-paste | The recession in the global economy will spur the demand for cryptocurrencies

The likelihood that the US economy and perhaps most European countries will slide into recession has reachedJuly 2007 levels.

An indicator assessing the possibility of an attackWith the recession reaching 35% in the next 12 months, it's no wonder people are worried. However, cryptocurrency investors still have plenty of reasons to be optimistic, even though global markets have a one in three chance of collapsing.

Ambiguous Signals

Pessimistic forecasts of the International MonetaryFund (IMF) on global growth rates is one of the main causes of concern among analysts and economists. This year, the IMF expects the global economy to grow by just 3.2%, the weakest forecast since 2009.

In addition, the protracted trade war between the U.S.and China has shocked many economists, who believe that such a conflict will only slow down the growth of the global economy. Fortunately, there has recently been a thaw in relations between the two superpowers: China recently made several concessions to the United States, and the United States suspended tariff increases on Chinese imports.

Growing tensions between the UK and Europe over Brexit threaten big problems for the British economy, especially if the parties fail to agree on the terms of exit.

Meanwhile, central banks are trying to reducethe likelihood of an economic downturn. The Federal Reserve, for example, has cut rates twice this year, which should stimulate government spending. The European Central Bank (ECB) has launched a large-scale asset purchase program: the Central Bank will spend $20 billion monthly on investments in bonds.

Farsighted buy cryptocurrencies

Many people believe that the traditional economy and cryptocurrency markets exist in two parallel worlds, but in fact there is a relationship between them, and it is much closer than it seems.

Some analysts believe that the recession in the global economy and the collapse of traditional financial markets will trigger an avalanche-like increase in demand for cryptocurrencies.

For example, during the period from July to August 2019The FTSE 100 fell by 10%, but at the same time cryptocurrencies perked up. During the mentioned period, the total capitalization of the cryptocurrency market jumped by 20%, and Bitcoin rose in price from $9,500 to $12,000.

Because the cryptocurrency market moves frequentlyagainst traditional markets, a global recession could be the stimulus needed to attract investment into the industry. In fact, some suggest that in Hong Kong, people are already looking at Bitcoin as a hedging tool.

How likely do you think there is to be a recession? Will it boost investment in cryptocurrencies such as Bitcoin? Share your thoughts in the comments below.