Bitcoin’s Crisis Response Plan
Investors are keeping go-to safeguards like bonds and gold within easy reach. However, there’s a new kid on the block! The next financial crisis will be Bitcoin’s first rodeo; can it stay on the bull?
A good recession-proof investment is not only stable underneath but stable on the surface. The promise of fixed income from bonds, non-volatile price movements from discount supermarket stocks, and uncorrelated charts from gold when placed next to stock markets, all stop the vulnerable investor making rash calls when everyone else is pulling their hair out.
It sounds ludicrous to bring Bitcoin into the conversation as anything other than an antonym. But then again, Blockchain was born out of the fallout of our last economic disaster. A growing number of market players are bending over backward to suggest Bitcoin’s coming of age is upon us, and that it’ll win the day when the establishment collapses.
Playing devil’s advocate, however, the US dollar is the wrong currency for Bitcoin to pick a fight with! It’s considered the world’s fiat safe haven during times of great peril, securely backed up when investors’ risk appetite drops dramatically.
USD rose 45% between 2008 and 2009, while Bitcoin, during an economic expansion, has experienced separate drawdowns of -53% (2012), -85% (2014), -35% (2017), -36% (2017 again), and -83% (2018). Oof! Safe haven, huh?
Believers may argue for it being stable underneath, but it’s certainly not stable on the surface!