How would a global recession affect cryptocurrencies?
That’s a million-dollar question, and we are, in a way, fortunate to have seen it in our time. The ongoing economic recession that was caused by the Coronavirus pandemic is now global and is affecting all the major markets around the world.
The economies of almost all countries around the world have collapsed in some manner. The price of assets has dropped like we never saw before. Even the crypto industry was not untouched by this economic crisis, as many top coins, as well as altcoins, are heavily crashing in price and demand.
Why is this happening?
Ever since the coronavirus outbreak has been declared a pandemic by the World Health Organization (WHO), the economies worldwide started collapsing. This is because most of the countries are in a lockdown status, where businesses are restricted from performing their regular supply-chain operations.
People are not working and there is almost zero production. All this is affecting the economy, as there is no production and income, so there is no money in the market.
Since many people are not earning money, they need what they already have to survive in this situation, and therefore, cannot invest it in the market, like they used to do before.
This is the primary reason why the market is collapsing, i.e. the price of most of the currencies & assets is dropping, as there is no demand in the market.
The same thing is happening with cryptocurrencies. As people have no money to invest, they are simply avoiding investing in or trading cryptocurrencies, which is resulting in a value depreciation.
Why should crypto investors worry?
One obvious reason to worry about the ongoing pandemic situation is that the market demand for many cryptocurrencies is decreasing. In fact, many investors are looking to sell the currencies/assets they have, as they need money. So, the supply is huge but the demand is almost none, which is causing a significant drop in the coin value.
If you hold bitcoins, be ready to see a major drop as the situation gets worse. In no time, the bitcoin value may even hit the floor, and your investments in bitcoin may be worthless. So, that’s certainly a reason to worry.
How can we turn things in our favor?
Now, on the surface, it might seem like the market is becoming worse and the prices of all the digital assets are declining, which is true to some extent. But, that doesn’t mean it’s not the right time to invest.
Whenever things like this happen and the price of assets starts dropping, people start panic-selling their assets in the fear that the price will further drop and they will incur a loss.
This must be true, but traders/investors must understand that eventually, the market will bounce back; it always does. So, rather than selling your assets, instead, you should be buying more.
For example, the price of the Titan coin has slightly decreased due to the ongoing recession, which means you can but TTN now at a lower price than before.
Now, it’s almost certain the price will rise back once the market recovers post the recession. When that happens, you’ll be in a strong situation, as your assets will have much more value than what you paid for it.
Don’t fear from the recession, leverage it for your good.