2023 Global Recession, Here’s The Impact On Bitcoin

2023 may still be a troubled time for risk assets due to recession. Crypto assets will not survive the impact of the global recession, in fact it is not uncommon for cryptocurrencies, including Bitcoin, to lose three-quarters of their value.

Meanwhile the World Bank estimates that global gross domestic product will only increase by 1.7 percent in 2023, about half the pace forecast in June.

This is the weakest growth profile since 2001 and significantly slower than the 6.0 percent growth expected for 2021. In addition, the International Monetary Fund also predicts global growth will slow to 2.7% in 2023.

Investors expect central banks to raise global monetary policy rates by nearly 4 percent through 2023, with an increase of more than 2 percentage points, which could be bearish on Bitcoin.

The European Central Bank argues that Bitcoin’s recent fluctuations and 2022 volatility was the final nail in the coffin for the cryptocurrency, despite its Q4 rally. So a possible global recession could cause a big drop for Bitcoin.

The probability of a global recession occurring in 2023 is estimated at around 35 percent. This is a significant increase from the chance of a decline in November 2020, which was only 65 percent, and more than double what it was six months ago.

While this probability is not certain, it is higher than the average professional economist predicts, at about 25 percent.

When a global recession hits, it can have long-term and far-reaching effects. This can lead to higher unemployment rates and reduced consumer spending.

This can also cause a decrease in investment, a decrease in global trade, and a decrease in global economic growth. A global recession can also cause currency depreciation, increase in consumer prices and decrease in business confidence.

In addition, it can lead to increased poverty and inequality, as well as increased social unrest and political instability.

Impact of Recession Affecting Interest in Buying Bitcoin

Of course, during a recession consumers tend to cut back on their spending, and this includes less interest in buying Bitcoins.

This is because recessions tend to reduce income and cause people to be more careful with their money. Therefore, they tend not to invest in highly volatile assets like Bitcoin.

In addition, increased recession risk can lead to increased levels of uncertainty, which can further reduce the demand for Bitcoin.

What and When Will the Global Recession End?

A recession is a period of continued economic decline. This is usually measured using indicators such as GDP, unemployment, and industrial production, and is usually accompanied by a decrease in consumer spending and an increase in unemployment.

Recessions can occur for many reasons, including rising interest rates, rising inflation, declining consumer confidence, and rising borrowing costs.

It is difficult to predict when a recession will end. Generally, recessions occur in cycles, lasting between six and eighteen months, although some recessions last longer.

The length of a recession depends on a variety of factors, including the severity of the downturn and the strength of the recovery measures taken by governments and businesses.

Some examples of global recessions include the Credit Crisis of 1772, the Great Depression of 1929–1939, the OPEC Oil Price Shock of 1973, the Asian Crisis of 1997, and the Financial Crisis of 2007–2008.

Analyst Predictions Regarding Impact of Global Recession on Bitcoin Price

According to analysts, if a recession does occur this year, Bitcoin price could be affected in a number of ways. For example, some analysts believe that the price of Bitcoin will decrease due to reduced demand, while others believe that the price could increase as investors seek safe havens from a recession.

Some of the analysts considering the matter include Murad Mahmudov, Michael Novogratz, and Jeet Singh.

According to Galaxy Digital Holdings Ltd. founder and CEO Michael Novogratz has predicted that Bitcoin could reach a price of US$500,000 in the next 13 months.

Jeet Singh, an Indian-American business entrepreneur and portfolio manager, has predicted that Bitcoin could reach a price of US$50,000 by the end of 2019. Jeet Singh made this prediction in April 2019.

Meanwhile, Bitcoin price predictions in 2023 vary widely. While some experts predict that the price will reach $100,000 by 2023, crypto enthusiasts who are more bullish say $250,000 is not far away.

Major financial institutions such as JPMorgan and Bloomberg have made their own predictions, with JPMorgan predicting a long-term high of $146,000 and Bloomberg predicting a potential $400,000 in 2022.

A recent study by Deutsche Bank found that about a quarter of bitcoin investors believe the price of the BTC asset will be over US$110,000 in the next five years.