Global Crisis! How Bitcoin Price Will React?
Can a global meltdown trigger Bitcoin crisis? Before we jump on a conclusion, let’s know what global crisis is? In simple terms, a global crisis is an event marked by the falling purchasing power of the consumer. This makes it difficult for thousands of business to reach their annual target and growth. Moreover, the global crisis can also influence the price of several commodities, and equities, this can even include Cryptocurrencies such as Bitcoin!
The Financial Crisis of 2006-2008
The global crisis also gives rise to job losses and a massive slash in real estate prices. During the crisis, the prices of goods and services can dramatically change. The last known global crisis occurred in the year 2006-2008. And many people believe that Satoshi came up with Bitcoin as a result! But let’s move forward to our topic. How global catastrophe will affect Bitcoin’s price, will there be a Bitcoin crisis in the industry?
Bitcoin works as an asset same as gold, except it doesn’t have any physical existence. To get a better picture, we need to see what happens to such assets that tend to be a store of value in the time of global crisis. Below is the picture detailing the yearly price changes of gold during the pre and post, crisis period.
From the table, we can conclude that assets such as gold spikes in time of global crisis. This is because people feel their money is safer in such commodities rather than locked in cash. In addition, investors hordes such assets to increase or maintain their wealth against the rising inflationary pressure. People also flock to gold during a crisis because it has its intrinsic value.
But what about Bitcoin will its value plunge during the crisis or will the traders see new highs? The answer to this is simple. Bitcoin and gold depict a lot of similarities. They both work as a store of value and are a safe long term investment, having an intrinsic value. Besides, many people even refer to Bitcoin as digital gold.
A global financial crisis is a period of great uncertainty as most of the stocks and assets price are falling. Such events can create a room for Bitcoin growth because it is a mobile asset, unlike many others. Thus, putting the digital currency at a greater advantage in comparison to other commodities.
You can buy Bitcoin anywhere in the world while sitting at home. We have also seen examples where Bitcoin price has spiked in certain exchanges at times of confusion and crisis in certain areas.
Uncertainty will cause Bitcoin’s price to spike
Below are two separate cases where Bitcoin was selling at a premium price at times because of confusion, uncertainty, and fear of bankruptcy
There are dozens of such proof where Bitcoin price has spiked at times of crisis. As we see, Bitcoin performed well during such times then there is a very high possibility that contrary to popular belief that its price will face a downtrend, it would rather spike during the global meltdown.
The local country exchanges will likely experience an increase in volumes and trades. Bitcoin can be brought, sold, transfer to any country without the use of bank or government. This, in turn, leaves gold and other stocks far behind Bitcoin in mobility and divisibility, adding this factor to the trader’s interest during a global crisis.
Disclaimer: This is just an opinion and should not influence the decision of the reader.