Amid a large economic downturn recently, there are wide concerns about an incoming recession in the United States. With that, the US dollar and overall economy take a huge tumble, heavily harming investors’ wallets. However, with its recent growth and developments as a major talking point, some analysts believe that Bitcoin, the leading cryptocurrency, could be a “safe haven” amid the recession concerns.
Indeed, Bitcoin is growing more and more popular each day in the US, even becoming a talking point in government and in the presidential election. The US Department of Justice currently holds billions of dollars worth of seized bitcoin. With this stash, there have been proposals to transfer Bitcoin to the Department of the Treasury to transform BTC into a reserve currency for the country, which has brought mixed reactions. While it may be a long and complex process, the idea isn’t impossible and would set Bitcoin up to be a major game-changer for the safety of the economy.
Bitfinex analysts suggest bitcoin could act as a “safe haven asset” during an economic recession, though the broader crypto market might suffer. “The fear of a global recession is indeed plausible given the current economic indicators and the recent actions of central banks,” the analysts suggest. “Over the past three months, central banks have executed 35 rate cuts, surpassing the rate cut levels of early 2024. This proactive easing is reminiscent of the 2009 financial crisis, which saw 76 cuts at its peak.”
Bitfinex Analysts Call Bitcoin a Savior Against Potential Recession
The Bitfinex analysts also say that there are several indicators that an economic recession is coming. Currently, they put the chances of a recession at 40%. “The substantial amount of speculative-grade debt maturing in the US in 2024, coupled with falling bond yields, indicates a stressed financial environment. Investors’ move to safer assets and the decline in yields are classic recession indicators, reflecting a lack of confidence in sustained economic growth.”
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Bitcoin has exploded in price over the past half-year to new all-time highs. This boosted not just the value of the coin being held in investors’ pockets, but also the value of the BTC the US has in reserve. Compared to the US Dollar, Bitcoin has far less supply, thus making its demand higher and hence value. As the world becomes more accepting of digital assets in the future of finance, it is growing likely the US won’t be the only one to turn BTC into a reserve currency. With ETFs succeeding in the country and Bitcoin a hot topic for conversation, the asset could indeed be a safe haven if the market completely crashes, so long as BTC doesn’t follow suit.
At press time, BTC is trading at $59,815.38, up 7% in 24 hours. The asset hopes to reclaim the $60,000 price threshold by the end of this week.