| json_metadata | "{"app":"musing/1.1","appTags":["cryptocurrencies","money","thoughts"],"appCategory":"cryptocurrencies","appTitle":"Will the crypto market benefit from the next recession?","appBody":"<p>Can't say whether we will see a global recession early next year or the year after that. The central banks and failed govt policies have to induce another recession. Also lack of understanding amongst general public about how credit is useful and how economies work will make matters a little worse. </p><p>Whether crypto will see a boost during the next recession is also a very difficult question to answer. That primarily has to do with lack of data. Bitcoin or crypro are a numerical way of understanding network effects. For the first time, one can value a network based on number of adopters. So if adoption goes up during the recession, surely crypto will see a boost. </p><p>However, one also needs to understand, what money has already gone into crypto? I think its mostly early adopters who have invested personal money and are in it for the long run. However, the market could also have benefitted from the massive money printing exercise carried out by central banks, which has led to money flowing into riskier assets, hence the rise of venture capital and em investing. If some of this money is pulled back during the next recession, crypto will bleed even more. Crypto largely is seen as a risky volatile asset class. However some also see it as a 0 correlation asset class. During a rising economic cycle, when mutual fund inflows are going up globally thanks to economic expansion, the second group of investors will have surplus to implement their idea. During a downturn, people will move to capital preservation and funds will also see large outflows. That's also thanks to the fact that money is controlled by people who have lived with those financial investment strategies all their life. I don't think a recession will likely see a large institutional inflow in crypto and institutional money will always dwarf retail money. The scale is just incomparable. </p><p>Adoption on the other hand can create a powerful network effect. However for that the financial system should be under threat. And dapps and blockchain needs to become even more iser friendly. I dont think this financial crisis will be about banks, or about governments. Actually it may be about govts. Because the debt from 2008 passed from banks to central banks really. If people understand how fucked up traditional finance is and how cocky elites have become, and user experience of crypto is made easier, crypto will see exponential growth during next recession. However, those ifs in the last sentence are massive and people too busy overconsuming gossip and goods to realize anything.</p>","appDepth":2,"appParentPermlink":"f3nccwhzq","appParentAuthor":"cryptoandcoffee","musingAppId":"aU2p3C3a8N","musingAppVersion":"1.1","musingPostType":"answer"}" |
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