Recession on the Horizon: What Will a Downturn Mean for Bitcoin?
Many experts believe that the US economy is headed into a recession, and that recession will almost certainly become a pressing issue for whoever the next president is (likely Trump or Clinton). Also read: CryptoGraffiti: Permanently Preserve Images on the Blockchain Fears about the future recession have sparked a conversation about how the next president, whoever […]
Many experts believe that the US economy is headed into a recession, and that recession will almost certainly become a pressing issue for whoever the next president is (likely Trump or Clinton).
Fears about the future recession have sparked a conversation about how the next president, whoever that may be, will handle it. The policy proposals could be expansive, and they could go in completely opposite directions depending on the person in office.
The preparation for crisis could reach home — especially if Bitcoin takes off just as a recession ensues in the United States.
Is the US Economy Running Out of Gas?
It is believed that the US is just simply overdue for a recession after seven years of growth. Historically, boom intervals have lasted less than five years, with a bust of some kind inevitably following for a period of time.
The business cycle is a hard thing to predict. In terms of when a bust will happen and what exactly will happen during that bust is an almost complete unknown.
Looking to the Austrian theory of the business cycle provides little to no help in this regard, either.
While the ABCT can provide us a theoretical framework from which we can interpret historical events, this is an after-the-fact analysis that provides us with very poor prediction prowess.
Where Austrian theory can shed light on future business cycles is strictly qualitative (what will happen rather than when), and this is assuming certain prior conditions are met, and even then it is only gives a broad understanding of how things will play out.
Regardless, many are worried, including experts and those who have a lot to lose during a future recession — like business leaders who want a president to manage the downturn as optimally as possible.
John Engler, president of the Business Roundtable, believes the next president has to, from the start, handle the downturn correctly:
“Our expectation is the economy will be relatively weak. The next president is going to need a plan right out of the gate.”
Recession and the Bitcoin Police
So, with a potential recession looming, how could it all affect Bitcoin?
How would legislators and other policy makers react to the cryptocurrency if such a circumstance were to arise? Unfortunately legislators tend to take a hands-on approach to the economy, and this approach only becomes more entrenched during the bad times.
Bitcoin has experienced its fair share of this, with many countries taxing, licensing, or even outright banning its use entirely. This is unlikely to change during a recession because American politicians would be looking for different ways to proactively mitigate the economic downturn the only way the know how, via legislation.
In fact, A US economy slipping downwards just as Bitcoin is taking off could very well put the cryptocurrency in the cross hairs of the next president, who might see it as a source of revenue, or an enemy to recovery.
However, Bitcoin doesn’t have much to worry about.
Its decentralized nature, paired with its finite supply, will make Bitcoin impossible to put down, as the value simultaneously skyrockets.
In times of economic turmoil, people looking for places to secure their wealth may very well choose bitcoin. Thus, as morbid as it may seem, the next US recession might be just what our favorite crypto needs to go mainstream.
How do you think a recession would effect Bitcoin? Let us know in the comments below!
Images courtesy of ibtimes.co.uk, scmp.com.