The “incoming recession” seems all anyone can talk about over the past few months. Just look to some of the foremost headlines in financial media, which repeat the word over and over again.
While this may seem like fear-mongering, there is evidence to suggest that danger for the economy is on the horizon: the yield curve between certain bonds has crossed negative — a signal seen prior to some of the most notable recessions of the past four decades; the Federal Reserve is intervening in the so-called repo market; there is an ongoing trade conflict between the U.S. and China along with South Korea and Japan; a war may erupt in the Middle East yet again; and so on and so forth.
Of course, with this financial crisis seemingly approaching, investors have been looking for safe-haven investments — places to put their money to avoid the loss of wealth over time. Some, interestingly, have looked to Bitcoin.
Though according to one prominent cryptocurrency commentator — the legendary Andreas Antonopoulos — this investment thesis may be short-sighted.
Bitcoin Proponent Questions “Safe Haven” Narrative
Bitcoin educator and author Andreas Antonopoulos recently sat down with Peter McCormack, a prominent Bitcoin-centric podcast to talk “Why We Need Bitcoin.” Due to the aforementioned narrative of BTC potentially being a safe haven, that topic came up in the interview.
Instead of agreeing with it, Antonopoulos interestingly questioned the narrative.
The prominent commentator established that the entire world is in a financial bubble, citing the dramatic growth seen in everything from real estate, bonds, and equities after the 2008 Great Recession. Antonopoulos went as far as to say that the current “everything” bubble is bigger than it was prior to 2008.
How Bitcoin ties into this: he claimed BTC and other cryptocurrencies have been caught up in the bubble, citing the fact that money understandably enters the crypto market if everything else is gaining in value due to diversification and risk-taking.
This means that when other financial assets crash, so too should Bitcoin and its ilk — at least according to the commentator’s thesis.
Though it gets worse. Antonopoulos went on to say that Bitcoin and other cryptocurrencies will crash harder than other assets, specifically citing the fact that this industry is full of venture capital investment and private investment, which should theoretically perform worse in recession than more liquid investments.
Some Beg to Differ
Despite these assertions, some say Bitcoin is likely to be a prime investment in recession.
Raoul Pal, the former head of Goldman Sachs’s hedge fund sales division in Europe, has explained in the context of the expectation of rates going negative in the U.S. and the macroeconomic backdrop turning tumultuous that investors should purchase bonds, dollars, diamonds, and, of course, Bitcoin. Pal has claimed that Bitcoin is the asset to invest in, as it effectively is an “option on the future financial system”.
Even Deutsche Bank, once one of the world’s largest financial institutions, has contested that Bitcoin and other cryptocurrencies may be a prime investment around the time of an upcoming financial crisis.
Also, as reported by Blockonomi previously, a chief reporter at the Financial Times stated that central banks are driving up the price of Bitcoin by effectively devaluing their currencies, which is something that should take place in a recession as central banks try and save economies.
(Some) Investors Would Prefer Bitcoin in a Crisis
Not to mention, the cold, hard statistics corroborate the idea that Bitcoin will be a fair investment in a financial crisis. Per previous reports from Blockonomi, an eToro survey conducted in July has shown that the “crypto is a safe haven” narrative is more than just a meme, but is reality.
According to the survey’s results, 40% of the millennials it polled would invest in “crypto” if a recession was to occur, compared to, say, stocks, bonds, or real estate. Sure, older generations involved in the survey, namely Generation X, didn’t express the same sentiment, though the data is there that Bitcoin would see capital inflows should a recession take place.