Bitcoin is on the move – Due to the failure of the Terra blockchain, huge wallets have returned to the dollar. This internal blockchain ecosystem crisis drove Bitcoin below $20,000 and Ethereum below $1,000. To this internal problem was added inflation, which erupted, sending the king of cryptocurrencies to market hell. The components of the economic downturn are then brought together. Bitcoin is experiencing its first economic downturn.
What exactly is an economic recession?
To help us better comprehend the situation in which Bitcoin finds itself, the king of cryptocurrencies defined the economic slump. In summary, a country is in a recession when its GDP is negative (GDP). The following are the impacts of economic downturns on our society:
Rising unemployment; a loss in retail sales, output, and supply; a drop in consumer buying power; rising prices and rising inflation
As a kind of protection during a moment of economic downturn, global banks take an assertive stance. They usually hike the charge. Consider the Federal Reserve, which hiked interest rates in order to combat inflation.
The Crisis of Bitcoin
Three Arrows Capital (3AC) is an example of a significant hedge fund that was unable to withstand the decline of Bitcoin. This ice age also signaled the start of challenges for other platforms, such as Celsius or BlockFi.
Cryptocurrencies then crashed in the face of a complex macroeconomic environment as well as an international political and diplomatic scenario that impacted Bitcoin miners. Indeed, the energy crisis created by the Ukraine war, along with the collapse of Bitcoin, does not bode well for the mining business, which is compelled to sell its BTC.
Predictions on the value of Bitcoin are doing well in this circumstance. Some people get nothing, while others get $10,000. Bitcoin naysayers even hold conferences: an anti-crypto lobby has emerged. Those who hold cryptocurrencies, according to Bill Gates, are insane.
Is Bitcoin Responsible for the Economic Crisis?
However, given the nature of Bitcoin, what is the true impact of the economic slump on Bitcoin? The solution to this issue may appear convoluted at first glance, but two criteria might provide us with some fuel for thought.
First, some background on the evolution of Bitcoin. In response to the 2008 economic crisis, Satoshi Nakamoto created the king of cryptocurrencies, Bitcoin.
Bitcoin was then used as a safe, immutable value that was not tied to any banks or monetary system.
Investing in Bitcoin then takes on a new meaning. Human nature dictates that in times of economic crisis, investors seek safe havens such as the dollar or gold. The increased usage of bitcoin and blockchain technology, on the other hand, is a game changer.
Finally, Bitcoin’s radiation is no longer the same as it was ten years ago. Bitcoin has already demonstrated its efficacy. It is a safe sanctuary for some. Many people “buy the dip,” from the Sunday holder to Michael Saylor. However, these Bitcoin fans do not appear to be sufficiently mobilized to drive up the value of BTC.
If history repeats itself, the king of cryptocurrencies is in its sixth bad market, each of which has been preceded by a bull run that has climbed higher than the previous top. However, you do not have to be naïve. The value of Bitcoin is affected by the current economic downturn. This does not imply that Bitcoin is declining as a result of the recession. However, the conduct of sellers has an impact on its worth. The latter are frequently trapped in conventional thinking that demonizes cryptocurrency in order to conceal the effects of the crisis. Bitcoin, on the other hand, stays unaffected, steady, and free.
