Ever wondered whether bitcoin could be useful in a financial crisis? It is something to think about. As a bitcoin realist I take a step back and try to examine the issue.
So ok we are in a serious financial crisis for example. We are talking a systemic crisis where banks are closed, and stock markets suspended. The number one thing people are thinking is how to get their money to safety. That means withdrawing it from the bank and keeping it at home. Converting it into tangible assets or most commonly converting it into gold. Gold being the most trusted and universal form of money. Now bitcoin has come along, and we have yet to see how useful it would be in a financial crisis. I suspect it will allow people to move large amounts of money very quickly to safety if it maintains purchasing ability. However, governments are not going to stand by and see money disappear from their economy. This is where the danger of bitcoin being a victim of its own success. Governments may unsuccessfully attempt to outlaw bitcoin and deliver harsh penalties to those involved with it. Many exchanges may be raided and forced to shut down. Therefore, it is important to keep your bitcoin off an exchange. This would cause bitcoin to go underground and become a black-market tool of concealing and transferring assets cross border.
This is all opinion but here is what I think will happen. I believe bitcoin price would spike so drastically. Maybe $100,000 a coin or more. However it would only be a very short lived high. It may be weeks before the public come to their senses. In the meantime, much of the crypto market will also spike causing such a huge bubble in crypto that a crash worse than any existing financial crisis will occur. This is what I describe as a double whammy. A financial crisis that leads to a boom and bust in bitcoin and a further financial crisis that is so dangerous that we may lose a decade of prosperity. Crypto wealth would have just vanished into thin air. With no central authority or government to resolve the crypto crisis many people would be wiped out with no one to blame or go to for help. Governments will just shrug their shoulders as people suffer. The elite will have gotten in and out of crypto as the price increased and would have been converting profits into gold. Only the average person will be left carrying the can.
This all sounds dramatic but keep in mind that a crisis can happen at any moment and is always caused by greed. So, if a crisis occurs and you see bitcoin price increase so rapidly don’t be last to get out. Big spikes in prices are just that a spike. They never last and when they go down they take a lot of people’s wealth with them.
Stay safe and happy hodling 😊
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