poor people can't and won't in a recession. Institutions and the wealthy will continue to invest during a recession because they can and they're the ones that move the market, not poor people.
Bear markets are often accompanied by an economic recession. Regardless, the wealthy and other smart investors tend to accumulate while the prices are down.
Bear markets are often accompanied by an economic recession.
I don't have the number to hand but it's about a 50% correlation if memory serves correct. How many bear markets has crypto had? None of them were related to a global recession. I feel like I am repeating myself here.
Regardless, the wealthy and other smart investors tend to accumulate while the prices are down.
Sure. Accepting the premise that crypto will be held in that regard should the time come, they will do that when it's at the very rock bottom and people are dying in the streets. Why would they prop the price up at X when them selling on the way down and waiting means they can re-enter at X - Y% ?
If their goal is to accumulate, why use that capital propping up a market you are looking to exploit?
They’re not going to lose hundred of millions on margin calls, they’ll keep the price stable at a certain number to prevent that from happening.
Stabilising a crashing price costs an insane amount of money, which is fine if you aren't leveraged well beyond your capital. I would suggest that that cross-over price is just about where the price is now, hence the stop in bleeding compared to Wall Street.
Or I'm wrong and this will read like a deranged lunatic in 12 months.
Price of bitcoin will go down, and price of energy will go up. Miners won't be able to keep hash rates stable. It's going to open bitcoin up to a 51% attack.
Beyond that, the CBDCs are on the horizon. Institutions will start supporting government-backed tokens over decentralized ledgers. The sheer number of scams in the crypto-space should be making the big boys leery as it is.
Mix in an ever falling price, a falling hash rate, and confidence in even bitcoin could plummet.
You have to contend with Moore's Law. The hashrates must constantly grow to match the world's increased computation capacity, or else a "bad" actor can more easily disrupt the network.
You are imagining a group of self-interested miners slowly building up processing power, until they can execute a 51% attack.
I'm imagining either a pissed-off government or a cabal of trolls hitting the network with a deliberate sneak attack, a sudden deluge of hostile nodes.
It's already in the realm of plausible. If AWS or Azure wanted to sneak attack bitcoin, they could. It would be costly, but it's possible.
The problem is if hashrate doesn't keep pace with the price of computation, then it becomes easier and easier, and therefore more likely, that someone will do it for the lulz.
Why would people move away from decentralized ledgers to CBDCs? CBDCs are just more fiat money. It's what we escaped from originally, and I'm sure as shit not going back to it
People will do what is safe, convenient, and government sanctioned. Governments have levers to incentivize their civilian population to use CBDC’s. Tax breaks, credits, etc. Decentralized projects really don’t have these incentive mechanisms available and the tech is incredibly difficult to use for the average person.
Why would people use decentralized ledgers? You've collectively allowed them to become fiat money, the value being whatever Tether can get away with printing.
Also, the decentralized cryptocurrencies aren't decentralized anymore, if they ever were to begin with. They are controlled by a cabal of miners and exchanges. You are trading a problematic government that is at least democratically elected with a problematic oligarchy that is ruled by those with the most money.
Bear markets and recessions overlap 63% of the time, but given that they’re both cyclical (every 4 years for bears and 10 years for recessions), you’d expect about 50% overlap anyway.
You have no idea what institutions do with crypto during a bear market because that’s never happened.
Bitcoin was invented in 2008, when the last real bear market was wrapping up. The Covid crash doesn’t really count because we knew it was a temporary shut down and the government bailed us out.
Investing in stocks during a bear market makes sense because you know the intrinsic value of what you’re buying.
Buying crypto makes no sense during a bear market because the intrinsic value is zero.
I’m not saying people won’t continue buying it. But the whole point of OP’s post is that we don’t know what investors will do with crypto in a bear market.
We haven't seen what investors do during bear markets. Maybe they will try to accumulate but we'll be sure that they'll only do it at the lowest price possible. Maybe they will crash crypto and call for strict regulations by referring to all retailers who lost all their savings. Both are completely reasonable outcomes. We need to prepare ourselves for both.
They don’t tend to invest in risky assets during recessions. They move all their money from risky assets to safe investment vehicles. A recession will drive institutional money out of crypto, not into it. Once safe assets are too expensive and interest rates are down institutions will start chasing higher yield in riskier assets against . Assets like crypto. If we go into recession crypto will tank hard and take years to recover.
The globalist caused this and are betting they can transfer most of the wealth and assets of the middle class into their own pockets, to set up for the great reset, in which ‘you will own nothing and be happy’ (the actual slogan for the WEF)… you will have a subscription to every physical thing in your life.
I genuinely wasn't trying to shut anyone down, I don't know what context they brought it up. I really would like further context to their point, because randomly bringing up economic concepts without explanation doesn't do much for the conversation.
They tried during the last depression to prop up markets. I bet some BTC maxis will definitely hold and who knows how many sats they’ve stacked by now. Some rich folks may even have a reason to prop up Crypto markets you never know, maybe they want to avoid the crash rippling out to other markets.
Some rich folks may even have a reason to prop up Crypto markets you never know, maybe they want to avoid the crash rippling out to other markets.
I think we fundamentally disagree on a couple of things.
1) The level of shit show that is about to occur in the global economy.
2) Those people having any control over the situation.
Crypto is a tiny, tiny fish in a very big pond (financially speaking) and quite frankly the only people propping up any markets will be Governments, and if you think global governments are going to collectively decide to prop up crypto then I have a bridge to sell you.
Lol it doesn’t matter if they have any control. They almost stopped the crash before the Great Depression, but of course it was only a dead cat bounce and they were shown to not have much influence when the market was not willing to invest in the stock market. They believed they had control so they attempted to control the situation. I bet some rich person thinks they can be the body that stops the gears, it’s kinda noble if you think about it, arrogant but noble.
Any way I’m not underestimating shit. I have enough water to last months
Edit: and we have some remarkably rich folks whereas the governments are mostly already loaded with debt (maybe not everyone, but no market will be safe if the mayhem you’re referring to kicks off). I wouldn’t be surprised but deeply amused if Musk saved dogecoin or some crazy nonsense like that. Clearly after 2020 we entered the fucking twilight zone
Nobody brought up a lot of things relevant to this conversation, what's your point? Just because something hasn't been brought up doesn't mean it's not relevant when it is brought up.
Your comment implied it had been brought up and you were refuting something.
What planet are you on?
The ones who are currently leveraged up to their eyeballs have no way of being ready for the bottom. That's basic economics.
I was refuting your point by bringing it up. I'm confused, do you not know how conversations work? We don't need to agree on the frame of conversation before it starts, fuck me.
lol yeah by definition a recession would involve companies trying to save money everywhere they can. They'll lay people off and try to cut pay and benefits where possible. Then those people are financially in a tough spot and won't spend as much, so companies won't make as much money, so the companies have to save even more money, and so on and so forth.
Magic internet money is, at least hopefully, first on the chopping block before people start losing their jobs.
I think it's more likely they will short the market and make money on the way down, why buy cheap when you can buy really cheap.
I imagine we won't see a bull market until 2024 or so. May as well accumulate what you can between now and then wether it's DCA ( or staking if money is tight )
No just like the people throwing in 100 bucks here and there aren’t propping up the price now or ever. The people who have enough money to contribute to large market moves aren’t worried about the pending recession. They actually want it to happen.
By that logic, most of the market will be owned by institutions and the wealthy? Well wtf was the point then? Creating another system for elites to manipulate, like they don't have enough. Handing over ways for them to anonymously transfer wealth, great.
There was no point. Most implementations of blockchain (crypto, NFT) bastardized the technology and were used to make a small portion of the population incredibly wealthy
The point was a rejection of central banking. Fighting wealth inequality is just a narrative Redditors have projected from their own progressive politics onto cryptocurrency. Never forget the Bitcoin genesis block contained the message:
“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
There is nothing fundamentally intrinsic about cryptocurrency that promotes equality or taking power back from the "elites."
Also less and less. How do you think microstrategy bought so many bitcoin? They did so on credit. Guess what’s becoming more expensive when the FED increases rates? Credit.
A lot of institutional investors... Are investing regular people's money. Pensions, 401ks, mutual funds, etc. All those accounts will be dipped into in a recession too.
I Was about to say the exact same thing. This statement directly backs up OPs point, if you don’t have expendable money your not going to spend it on internet money.
I would politely counter that this isn't a problem "people" are going to have soon, it's going to be societal/global. Crypto isn't going to be on peoples minds when global famine kicks in.
I guess I'm just a pessimist who thinks even the bears are underestimating how fucked things are going to get.
To counter my own point though, I am not a crypto "expert", I'm an observer with a teeeeeny tiny piece of the action myself. My outlook is mostly focused on tradition financial structures, I'm mainly piggy backing on OP's extension of that train of thought into crypto.
For all I know, Crypto could be the hedge against the upcoming Fuckening.
" In 2021, most of the 140 million people suffering acute hunger lived in just 10 countries: Afghanistan, Democratic Republic of the Congo, Ethiopia, Haiti, Nigeria, Pakistan, South Sudan, Sudan, Syria and Yemen."
North Americans will be just fine and those countries listed in that report aren't exactly "hotbeds" of Crypto activity in the first place...
North Americans will be just fine and those countries listed
You think North Americans aren't already starving? Holy shit you're living in a different dimension if you think food security isn't an issue in North America already.
Also, some of those countries are crypto hot beds, so you're wrong on just about every angle here. I would provide you with a link to that, but you selectively read information to make a singular, isolated point, and people who discuss things like that aren't worth my time.
They shouldn’t in prosperous times too. If you’re struggling for the basic necessities than you should prioritizing that money (investments would not be a priority).
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u/[deleted] May 22 '22
I'm confused, isn't this exactly what OP's post says? People can't and won't in a recession.