Born in 2009, Bitcoin’s nascent lifetime has spanned the post 2008 crisis era. Never before has Bitcoin experienced a full credit cycle: stocks, bonds, gold, and silver have churned through multiple booms and busts and the investing community has a decent idea how each asset will class will perform in given scenarios. The same cannot be said of Bitcoin in the context of a market meltdown…will it rise or will they fall? More specifically, will Bitcoin survive the crash?
Seeing as Bitcoin is so new to the marketplace, it’s realistic to think that it won’t survive the next credit crisis. When the dominoes start falling, people will flee to safety and this means everything will be liquidated for the fortress of the US Dollar and USD cash equivalents. The fear trade will take over the world of finance and in the panic all the asset classes will significantly correct. Stocks, bonds, gold, and silver will survive, albeit at lower values. However, with Bitcoin and its tiny micro cap, it will go to zero as the digital currency economy has not hit the appropriate maturity level to make it to the other side.
That’s the negative outlook for Bitcoin. On the flip side, if and when the market goes into freefall Bitcoin will be seen as a safe haven, disconnected from the financial anarchy going on in the mainstream world. When the fear takes over, the chances of capital controls coming into place increases in addition to a crisis in confidence of all asset classes. Naturally the dollar will do well, and precious metals / blue chip companies will survive too, however, Bitcoin may do “less badly” than the majority, especially when viewed as a medium to circumvent capital controls Plus, if there is a “big print” post meltdown through a coordinated effort of global central banks, you could see fiat currencies everywhere spiral downwards and ignite a rush into inflationary protection…which includes precious metals and possibly Bitcoin.
At the end of the day, no one knows what will happen. If we did, we would bet that way and everyone would be billionaires. If you believe in the protocol and the underlying value proposition there is no reason you shouldn’t read up on Bitcoin or stay the trade. Unprecedented times necessitate unprecedented measures, and the question really shouldn’t be “Will Bitcoin Survive the Crash” as much as it should be “What Will Survive the Crash”?
