Fundstrat Global Advisors found in a poll among institutional investors and twitter users that a majority of individuals believe that cryptocurrency prices will rise during a recession.
The poll found that 72% of institutional investors believed that cryptocurrency prices will increase during a recession, while 59% agreed via the twitter poll. The institutional investor sample size was 25, while the twitter poll size was 5,382. The poll also found that central banks were viewed as the most heavy influence on cryptocurrency prices (35%), followed by emerging markets (28%).
However, Mati Greenspan, a senior market analyst at eToro, said that a price rise during an economic recession is not a certainty. He does not “think it’s so binary” since looking “over the past few years crypto has had a unique correlation with high-risk assets. They have risen as investors sought additional risk”. Nevertheless, he did say that he “sees why investors think that” and that “if there was a catalyst that would make people question the role of these institutions then he can see them moving higher”.
Cryptocurrency as an alternative to the traditional financial system
Bitcoin only emerged in 2009 after the financial collapse of 2007/2008 and was relatively unknown at the time so cryptocurrency still remains untested by a wide economic recession. So the exact price movements that cryptocurrencies will make is still unclear. Cryptocurrency is commonly pitched as an alternative to government-backed fiat currencies and thus, the argument is made that individuals will turn towards cryptocurrencies as an escape during an economic downturn priced in government-back fiat. However, valid arguments are also made that cryptocurrencies are high-risk investments since so little history exists on them. Thus, this is the motivation behind the argument that individuals will turn away from cryptocurrencies as they seek wealth and income safety in other investments...