As crypto enthusiasts, we really can’t afford a recession. That’s what venture capitalist Spencer Bogart is telling everyone. He’s saying that any severe financial crisis would ultimately cause bitcoin to plunge back into a period of extreme darkness that would make 2018 look subtle.
Bogart: A Recession Would Be Very Bad for Bitcoin
While he’s certain that bitcoin will be a “safe haven” in the future, he’s not entirely sure its technology is strong enough yet for it to withstand a series of economic hits similar with what the country experienced in 2008. He’s confident that should a recession strike the United States, bitcoin and crypto would suffer exponentially.
In a recent interview, he comments:
When you think about really severe crises taking place, a liquidity crunch, another global financial crisis, I think that bitcoin will struggle to do very well from a price perspective.
11 years ago, when the economy in America really began taking a serious downturn – people were losing their homes and their jobs and their 401Ks, businesses were closing their doors permanently, etc. – bitcoin didn’t yet exist. It was still in its early development stages and wasn’t quite ready for speculation or investors.
Now, things are very different. Bitcoin is playing with the big boys, and along with stocks and bonds, is vulnerable to the same market trends. When the Great Recession occurred, one of the first things to occur was that stocks fell dramatically, and it is likely bitcoin would experience the same drop.
At press time, there appears to be great concern in the air that the U.S.-China trade war is about to take the global economy places it’s never been. The U.S. recently announced that it would enforce further tariffs on another $300 billion-worth of merchandise from China, while the eastern country has vowed to retaliate and is now placing billions of dollars of tariffs on U.S. imports.
It seems like both sides are trying to play each other, and bitcoin’s likely to get caught in the middle if they can’t come to an agreement. In addition, President Trump is now pressuring the Fed to cut interest rates for the first time in several years.
It Probably Won’t Happen Right Away…
Bogart goes on to say he doesn’t believe an economic collapse will occur in the immediate future. Discussing bitcoin further, he states:
As it grows up, we see bitcoin kind of evolving as it goes. So, I think right now it is kind of in this intermediate state where you really must think what the risks are and how severe they are. So, I think that when you have looming risks of monetary devaluation, things like this, bitcoin certainly looks very attractive, and I think that was a larger driver of the recent run-up in price.
At the time of writing, bitcoin is trading for just shy of $10,400.