October 27, 2020

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

The likelihood that the US economy and perhaps most of Europe will slide into recession has reached levels of July 2007.

An indicator that assesses the possibility of occurrencethe recession in the next 12 months reached 35%, it is not surprising that people are alarmed. However, cryptocurrency investors still have a lot of reasons for optimism, even despite the fact that global markets will collapse with a probability of one in three.

Ambiguous Signals

Pessimistic International Monetary ForecastsFund (IMF) in terms of global growth is one of the main reasons for concern among analysts and economists. This year, the IMF expects the global economy to grow by only 3.2% - this is the weakest forecast since 2009.

In addition, the protracted trade war between the United States andChina has shocked many economists who believe that such a conflict only inhibits the growth of the global economy. Fortunately, lately there has been a warming relationship between the two superpowers: China has recently made several concessions to the United States, and the States have suspended tariff increases on Chinese imports.

The growing tension between Britain and Europe over Brexit poses great problems for the British economy, especially if the parties do not agree on the terms of the exit.

Meanwhile, central banks are trying to reducethe likelihood of an economic downturn. The Federal Reserve, for example, 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 a month on investment in bonds.

Farsighted buy cryptocurrencies

Many 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 in traditional financial markets will trigger an avalanche-like increase in demand for cryptocurrency instruments.

For example, from July to August 2019The FTSE 100 fell by 10%, but cryptocurrencies revived at the same time. Over the mentioned period, the total cryptocurrency market capitalization jumped by 20%, and bitcoin went up from $ 9,500 to $ 12,000.

As the cryptocurrency market often movesAgainst traditional markets, a global recession could be an incentive to attract investment in the industry. In fact, some suggest that in Hong Kong, people are already considering bitcoin as a hedging tool.

What do you think is the likelihood of a recession? Will it boost investment in cryptocurrencies such as bitcoin? Share your opinion in the comments below.