Bitcoin appeared in response to the global recession of 2008. It allowed people to make money transactions without depending on the actions of third parties, such as banks, especially bankrupt banks, which were saved by the government at the expense of taxpayers' money. The bitcoin source code provides for a limited issue of BTC, while the standard actions of governments during crises involve the turning on printing presses to flood the collapsing economy with money. The limited issue of bitcoin and its deflationary nature make it possible to compare bitcoin with eternal values, such as gold. At the same time, we see that during this crisis, bitcoin lost 75% of its maximum value of $69K. This indicates that bitcoin is not immune from the economic crisis and the global recession. By the way, gold is also falling. The entire crypto market lost $ 2.25 trillion over the same period, which indicates a large-scale destruction of demand in the industry.The collapse of bitcoin occurred at a time of rising inflation and the inability of central banks to stop rising prices. On June 15, the Federal Reserve raised its benchmark rates by 75 basis points (bps) to curb inflation, which reached 8.4% in May.At the same time, the US stock market index fell by more than 30% between November 2021 and June 2022.According to a survey of 49 respondents conducted by the Financial Times, almost 70% of economists believe that the US economy will slide into recession next year due to the Fed's hawkish policy.These forecasts increase the risks of Bitcoin falling during a full-scale economic crisis. And the fact that it did not behave like a safe haven asset during a period of rising inflation increases the probability that it will continue to fall along with the indices of technology shares.The collapse of Terra, a $40 billion "algorithmic stable coin" project, has led to the bankruptcy problems of Three Arrow Capital, the largest crypto hedge fund, and has also destroyed demand throughout the crypto sector.The incoming bearish forecasts for bitcoin suggest that the price will fall below the $20K support level, and Leigh Drogen, general partner and CIO at Starkiller Capital believes that the coin will reach $10K, falling 85% from the peak level.Nick, an analyst at the Econometrics information resource, believes that Bitcoin behaves like a stock market index, still being "in the middle of the adoption curve."Bitcoin is likely to continue to fall in the face of higher interest rates, just as the US benchmark S&P 500 has fallen several times over the past 100 years, only to recover strongly.
Can Bitcoin Survive its First Global Economic Crisis?
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