DISCLAIMER: This isn't meant to be a doomsday post. I'm more interested to hear what others think.
I've wondered about the effect of crypto if/when something like the 2008 recession happens. It sounds like there are 6 major Bitcoin holders out there that own almost all the currently-minted Bitcoin. Satoshi Nakamoto's one of them, but the other 5 are massive companies/financial institutions. The other 5 combined are huge, and companies are dumping their digital assets right now for liquidity in case we have another 2008 incident... This is what I've gathered from various articles online anyway.
Luckily LGF's quickly becoming one of the largest holders, but if the other 4 or 5 holders dump their Bitcoin, then the price will drop. To me, this would be a black swan event, and Bitcoin's value could return back to pre-2017 numbers (well below $10,000). Hopefully this doesn't happen as that would hurt Luna quite a bit short-term. It would probably help Luna long-term because LGF's still buying Bitcoin, and they have a lot more to go. They could buy it at a huge discount if something like this happens (provided they don't need to pivot), and come out on top once Bitcoin's price recovers.
That said, cryptocurrency came into existence in 2009. This was right before the 2008 recession. Crypto hasn't had an opportunity to exist during a major, historic recession like the stock markets have. If this recession happens (and it very well could), then who knows what'll happen to crypto. It could lose a lot of credibility, or it could be a game changer. Crypto/NFTs seem to serve as the foundation of what might become Web3 as the industry figures that out.
I do realize that these are all largely related USA economy concerns, and crypto is a globalized entity. The USA's economy is NOT the world's economy, but it is a major player, and the rest of the world's economies aren't doing so well either:
- The world still hasn't realized the full economic consequences of the pandemic
- Microchip shortage among other supply issues
- China's COVID lockdowns and current stance against crypto policies
- The Ukraine War/Russian invasion
- Sanctions on Russia
- The energy crisis throughout Europe
- The threat of nuclear war from Russia
The world's a scarier place than ever right now. Who knows what will happen.
On the flipside, maybe this is a major opportunity for crypto? If so many economies tank then maybe people all over the world will turn to cryptocurrencies as they temporarily lose faith in their countries' governments and economies. Especially while crypto's still new enough to be unregulated quite a bit from governments.
I'm feeling the FUD quite a bit right now. This is (potentially) my first major recession in my adult life, so I have no reference experience. My current thoughts is if it comes down to a recession or depression, then it's real HODL. I'd like to hunker down, and wait out the storm with my holdings throughout the recession for the several years it can take. I'd possibly even use this as an opportunity to buy at a discount), but who knows. There's still a lot of skepticism that crypto is more than just a fad.
What's everyone else's thoughts?
