Bitcoin will Survive Recession, but Ethereum Might Have a Tough Time

The effects of the cryptocurrency slump have neutralized from the time it had appeared last year. Experts believe that Bitcoin will survive, but Ethereum could suffer. It is also being stated that Ripple’s XRP would remain unaffected. Elaborating further on the slump and its consequences on Bitcoin, tech venture capital firm’s Cosimo Ventures’ Kyle Chapman said that Bitcoin would be the safe haven for asset management. He also predicted that the price would spike during an economic downturn.

Speaking to media, he said, “Because its supply is not controlled by any one person or entity, it’s more likely that Bitcoin will perform independently of broad market pressures (akin to how one would expect gold to react) — potentially even appreciating in value should demand for alternative forms of dependable value storage arise.”

On the contrary, Ethereum will be directly affected because it is more closely entangled with the equity market than other cryptocurrencies. As a result of this, Ethereum’s trajectory generally follows broader stock-market trends.

While this will have its negative consequences, experts believe that this could be a blessing in disguise, especially because tougher times separate the “wheat from the chaff,” giving a clearer picture of what is going where. Crypto fans may be ruing about the crashing bear market, but experts analyze that the retraction is fabulous for the health industry.

The next downturn could be approaching anywhere by 2020. But the one obvious question that is in everybody’s mind is how this will affect the cryptocurrency market. It must be mentioned here that the decentralized asset class was born at the tail end of the housing crisis. It is, however, yet to bear the full force of a lengthy bear market. However, even if such a situation occurs, it should be remembered that not all 2,000 cryptocurrencies are alike and not all of them will respond in a similar manner under pressure.

For years, digital assets have existed in a period of market expansion in the US, because of which the GDP has increased significantly, bringing the total GDP average growth from -1.73% in 2009 to 3.138% in 2017. The unemployment rate has also dropped from 10% to 4% with more than 2 million jobs each year for the past 8 years.

The economy is steadily improving throughout the industry’s life span. Meanwhile, some more casual observers have failed to appreciate fully how the intrinsic qualities of blockchain-based assets may benefit them. As a result of this, many have mistakenly assumed that all digital assets are interchangeable and will all react the same way to economic fluctuations. Companies weathering the cryptocurrency slump are likely to react differently, depending on their business model.