I thought it was a good asset to own in case of recession?
Also note we have a global currency war, where U.S. is forcing policy/pick your side to countries and also "exports" inflation.
This is done in part by the rate of increase of interests rate -- a derivative other countries can not simply follow up. In big part in the way energy gets exported.
So as DXY goes up everything else free-falls, and causes extra strain -- as the fixed costs to pay debt increase rapidly due to the rates too -- things break. And when things break, people sell everything they can to save the boat.
So you are looking at a table full of fireworks randomly popping trying to guess what is going to stay there. I wouldn't say there is a good asset thus.
Note this is simply unsustainable. My perspective.
Edit: But yes, you can make money during a recession. If there is a lot of inflation that might not count as much. I don't think I implied you can't with my statement. But even where you place your money is a game then -- think Lehman Brothers taking hedge fund liquidity down with it.
In 2013 it crashed 83% ($260 -> $45)
In 2015 it crashed 87% ($1,140 -> $150)
In 2017 it crashed 82% ($19,900 -> $3,540)
In 2022 it crashed 76% ($66,938 -> $15,853) - so far..
As we can see, 80% crash for Bitcoin has not been that scary.
> In 2011 it crashed 94% ($35 -> $2)
In 2011 Bitcoin's market cap was 23.6 million
> In 2022 it crashed 76% ($66,938 -> $15,853) - so far..
In 2022 Bitcoin's starting market cap was $891B.
In this context, I understand "scary" to mean "destructive economic impact", and from that perspective a 76% crash is very scary.
An example. A thousand people pay $1 for a coin. Then two people pay $1000 for a coin. The market cap is now about a million even though only about $3k USD were traded for the coins. A massive reduction in market cap would give the misleading idea the better part of 1M was destroyed, when in fact there can't be more than $3k in realized losses.
That goes out the window the moment that the current "market cap" value of the coin is used as collateral for transactions involving "real" money and assets.
Even if you fully believe crypto is the future, it's very hard to convincingly explain why BTC is the future and not one of the other coins which implement more features. Someone 20 years ago could have been right about the internet being the future but picked the wrong companies that would win.
I’m not. Most of the demand for crypto is only because it is going up. If it stops going up then speculators will look at alternatives, and it crash again.
Once it’s low enough that small gains represent a higher rate of return then investors will return and the cycle begins again.
This sawtooth pattern is probably inevitable, and will probably continue indefinitely.
We still don't. Assets have value.
The main downside of bitcoin is that because it has no cashflow, no one knows how to price it. I agree that in some sense, this democratizes investment in bitcoin, but resistance to any rational investment thesis sure seems a lot like gambling.
(Did I gambler's fallacy correctly?)
Bitcoin is a hedge against inflation of currency supply (QE infinity).
> WASHINGTON (Reuters) - The U.S. economy shrank during the closing months of 2007 for the first time in six years, the Commerce Department confirmed on Thursday, hurt by the steepest slump in housing since 1981.
> But it bounced back to record modest growth in 2008, avoiding back-to-back quarters of decline that would have met a popular definition of recession.
> The department sharply revised its estimate for fourth-quarter performance to show gross domestic product, or GDP, contracted 0.2 percent -- rather than growing 0.6 percent as it previously reported.
And later that year of 2008:
> Growth resumed in the first quarter of 2008, however, with GDP rising at a 0.9 percent rate that accelerated to 1.9 percent in the second quarter as government stimulus payments began to flow.
The wheels of recession were in motion since 2006, its head cropped up during the later quarters of 2007 and completely exploded in late-2008.
Look at all the macroeconomic indicators right now, inflation, energy costs, customer spending, etc., do you really believe we are not way into the wheels of a recession?
[1] https://www.reuters.com/article/us-usa-economy-gdp-revisions...
I think you left out unemployment from that list because it doesn’t fit the message. How many recessions happen with a 3% unemployment rate?
The economy is odd the last couple years. I don’t know that the usual data points help predict as well as they might normally.
> In December 2007, the national unemployment rate was 5.0 percent, and it had been at or below that rate for the previous 30 months. [1]
[1] https://www.bls.gov/spotlight/2012/recession/pdf/recession_b...
However, we have been in a sector correction for nearly a year now with it beginning to affect high growth cloud tech a year ago and moving into tech generally since. In general growth has done poorly as yields have risen and people have moved into other assets. Many over-leveraged investors have had to liquidate to stay solvent (due to not only falling asset prices but the cost for margin has rising extensively) further driving down prices.
But some large parts of the economy are operating much like they would if we were in one. Other large parts are not.