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18 January 2021

Why Bitcoin and Stocks Went Wild During A Global Recession - Decrypt

Why Bitcoin and Stocks Went Wild During A Global Recession - Decrypt

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On the one hand, 2020 could be defined by a planet rocked by a pandemic that caused millions to die, and an economic fall out that will be felt long after a vaccine is rolled out. .

The actions of the Federal Reserve, which were mirrored by central banks elsewhere - albeit not to the same extent - forestalled a cascade of bankruptcies that could have followed as consumers were told to stay at home. .

At the time of writing, more than 1.5 million people have died, with a confirmed 65 million cases and rising. .

In the UK 19% of the workforce was furloughed, in Germany 23% and in France that number went up to 41%.

The Institute of International Finance recently reported that the ratio of global debt to gross domestic product will rise from 320 per cent in 2019 to a record 365 per cent in 2020. .

During the 1950s, the fortunes of large companies and that of individual consumers used to be much more closely aligned, for a number of reasons. .

Some 88% of those earning more than $100,000 per year own stock, as opposed to 19% of those earning under $35,000. .

While Bitcoin is unique in that it can hold both positions, time will tell if the voices of economic inclusivity can be heard over the clamour of increasing profits.   

There are three areas that 2020s split will have an impact: debt, fraud, and civil unrest. 

The IIF concluded in its report on the status of rising debt this year is that,“more debt, more trouble.” 

That support is finite, and if businesses - and indeed Bitcoin - can’t showcase value above and beyond being propped up, a bubble is forming that will surely burst

Now Bitcoin is different thanks to its circulating supply, and we’ll talk more about that in next week’s long-read

The second way this year is likely to have an impact is fraud

At the beginning of this year, inequality was growing for more than 70% of the global population, according to a study published by the UN

This year will have compounded these trends

It's predicting that trend will only increase next year

If Bitcoin HODLers want the good times to continue, it may have to contend with the idea of BTC being less a subversive digital currency and more just another way the rich get richer.

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