Can bitcoin make it through economic crisis?

In Summary

• Bitcoin was set to break its most recently all-time peak, which it did in December, according to price history records. 

• Given the substantial drops in March 2020 and the volatile Covid reaction by policymakers, financial markets have done remarkably well since then.

A representation of virtual currency Bitcoin is seen in front of a stock graph in this illustration taken March 15, 2021.
A representation of virtual currency Bitcoin is seen in front of a stock graph in this illustration taken March 15, 2021.
Image: REUTERS

Bitcoin had an impressive year in 2017, with a 1,350 percent profit margin and a record of $20,000 for traders. The market crash will last across 2018 and 2019, and several businesses in the crypto industry would die as a result of the lengthy cryptocurrency winter.

Bitcoin customers start the year in a positive frame of mind at the start of 2020. The market crash was over, and Bitcoin users were betting on the third halving of the currency in May to kickstart a new uptrend. The COVID-19 pandemic, on the other hand, was the turning point occurrence that shattered stock market expectations.

Given the substantial drops in March 2020 and the volatile Covid reaction by policymakers, financial markets have done remarkably well since then.

As an abundance of cheap credit and quick profits finds a home in the bank stocks sector, the S&P 500 has erased all of its 2020 declines and is beginning its multi-year pullback.

COVID And Collapsed Economy

Although gold served as a sanctuary commodity during the early Covid panic, it has since collapsed from its August 2020 high of $2070 and is now hovering around $1800 per ounce, well to the consternation of gold bug and legendary Bitcoin denier Peter Schiff.

There are more than enough on-ramps for both corporate and business traders to pursue the Bitcoin stock market's traction, and many owners of other coins and tokens want to swap cryptocurrencies for Bitcoin in exchange for their altcoins. If interest remains high, market fluctuations could become much more volatile, as they have in previous Bitcoin periods.

Global Crisis Impact

The Global Financial Crisis of 2009 spawned Bitcoin. Bitcoin was secretly launched into the wild against a framework of bank collapses, government subsidies, and currency devaluation, where it was forgotten by all but a tiny but growing community of intellectuals.

More privatizations, extremely negative interest rates, and expanded monetary easing are now part of a new financial crisis and recession a decade back. Businesses and organizations are becoming more conscious of Bitcoin's particular marketing strategy and where it falls into the broader image.

Federal Reserve Easing or Bitcoin Easing?

The comparison between Federal Reserve monetary easing and an ever-increasing capital supply versus Bitcoin's third halving's monetary tightness is clear. The availability of paper money is increasingly rising, whilst the Bitcoin shortage theory is gaining momentum.

Asset rates have been driven up to unsustainable levels as a result of monetary expansion, which has forced up cash, stock, and property values. Also, a 1% change from many other investment vehicles to Bitcoin will result in financial inflows larger than Bitcoin's total market capitalization.

The encoded cap of 21 million coins in Bitcoin's specification creates a special virtual rarity. There is no way to raise production as demand increases. Established Bitcoin investors who can sell are the only source of availability. And many platforms are working helping to buy and sell bitcoin with their robot technology and user-friendly software like the bitcoin fortress app.

Final Say:

Eventually, it never costs to look at past market details if you're wondering if you should buy Bitcoin. In the last ten years, Bitcoin has seen numerous highs and lows, and it has been declared "dead" 383 times by the news media. That being said, it has regularly outperformed its most current all-time highs, so there is no need to presume it will not do so again.

Bitcoin was set to break its most recently all-time peak, which it did in December, according to price history records. Whether or not the share price formula holds, there might still be enough demand in Bitcoin to support a gradual and steady price rise.

Money printing and rising federal debt ratios, in the meanwhile, would lead to asset inflationary pressures and currency devaluation. Bitcoin could yet prove to be the perfect shield, with gold already stonewalling.