IMF warns of bad recession, can bitcoin be sold? (Opinion)

The International Monetary Fund cut its forecast for the global economy on Tuesday, warning in stark terms:

“The worst is yet to come, and for many people, 2023 will feel like a recession.”

As the old joke says: “Stagnation is when your neighbor loses his job. Depression is when you lose your own.” If 2023 looks like a recession to many people, as the International Monetary Fund warns, financial markets are at risk. This could mean a discount on stock and cryptocurrency prices.

Bitcoin price remains tied to stocks

The price of Bitcoin has been closely correlated with stocks for over a year and a half now. There are several theories about the factors behind this association.

It can only inevitably show what stock markets do when they reach a certain threshold of liquidity. Or it could be an indication that institutional funds have made up a significant portion of the capital inflows.

Regardless of the causal factors, the price of Bitcoin is likely to face strong and persistent headwinds. If the global economy stumbles into a recession, BTC could fall as investors close their cash.

Bitcoin price plunged during the rapid 2020 pandemic recession, along with stocks. Cryptocurrency markets were sold along with stocks in December 2021 and May 2022 as well.

Long-Term Bullish Outlook for Bitcoin

Now, on the other hand, it is possible that the bitcoin price could get a boost from the Fed’s intervention. If the Federal Reserve and other banks cut interest rates to fight the recession, BTC will likely rise.

However, in either case, even if there is no central bank intervention and the recession drives bitcoin prices down, the cryptocurrency will still be attractive at these prices.

This is because Bitcoin rose to prominence primarily in response to the 2008 recession. Then it had an incredible bull market after the worldwide collapse of asset prices in March 2020. BTC rose to far outperform stocks.

The lesson here is that markets risk bitcoin as well as other risky assets during bad times, but during good times, remembering bad times, they benefit massively from bitcoin with inflows to support the next economic shock. It is a long term bullish view.

Post-IMF warns of bad recession, can Bitcoin be sold? (Opinion) First appeared on CryptoPotato.

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