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Crypto pendulum returns to ‘real economic value’: Can Bitcoin price survive the recession?

(Kitco News) Bitcoin has raised more than $ 20,000 after briefly touching $ 17,000 over the weekend. But can the price outlook recover as the calls for recession grow and inflation continues to dominate the market headlines? StableCorp CEO Alex McDougall weighs in.

Looking at the remaining price forecasts for 2022, McDougall told Kitco News that investors need to differentiate crypto technology from the price angle.

“The technology aspect of crypto works well in a recessionary environment, and especially when the recession is bad, it can boost confidence. Don’t forget, crypto was born of the 2008 meltdown,” he said.

On the other hand, McDougall does not see bitcoin prices perform well in the recession. Here’s why: “I don’t think there will be a huge retail push or flight for bitcoin in the recession. “But if there is a risk-type event where this version of finance no longer works, then you are starting to see some real rotation there.”

During stagflation, the period described by slow growth and high inflation is likely to fluctuate in the Bitcoin price band. “I don’t think it will crash completely in the recession. Instead, it will consolidate the next round,” McDougall noted.

However, the CEO of StableCorp noted that if the US economy enters a period of stagnation with a constant turnaround of risky assets, the crypto space, including bitcoin, will suffer more.

“Last year, everyone was shaking their heads like hens and chasing gold coins falling from the sky,” McDougall explained. “The pendulum is back to a place where there is real fundamental economic value, and instead of building a quantum leap into the future, you’re looking at what many projects and companies are focusing on.”

Despite the recession, he said there was enough capital in the space to move these real-value crypto projects forward.

“There are billions of dollars devoted to adventure funds, but a ton of it is back. ‘Let’s take a deep breath, what’s the core, what’s the real-world thing you’re doing, how does blockchain actually help, what is the core value you’re building?’

On the technology side, McDougall is a long-standing bull that looks to overtake the financial future at some point. “Technology is generally accepted by the wider world because the future is at some point, five years from now, ten years or 15 years from now, and whether it is government-run or sector-driven, there will be blockchain in the future,” he said.

Continuing, crypto’s dual narratives continue to push prices in different directions.

“Everybody understands how we value stocks. We could argue that this is a discount rate or a forecast for this bear market. In crypto, we don’t have a stacked core essay,” McDougall explained. “We tried a bunch – digital gold, it’s money, PQ = MV.”

These representations usually raise prices, and the latest market mover crypto is viewed as a tech stock but is a dual representation of the risk-off asset and inflation hedge.

“So you end up with this crazy volatility based on what buyers are driving the narrative,” McDougall said. “In the industry as a novel and narrative-driven digital asset, there is always the opportunity for greater pain in the short term.”

Excessive price fluctuations for the crypto industry are difficult to swallow as it reveals further signs of an epidemic after the TerraUSD stablecoin crash in May. In addition, McDougall noted that it highlights challenges with centralized lending platforms and Ethereum stocking liquidity services.

“[But] When digital assets move, they usually move significantly in both directions. When there are specific and targeted events like this, it does not change our outlook on the future, adoption is growing exponentially more than it is today, and forms a significant part of a more efficient, transparent and open world, ”he said.

For Bitcoin, in particular, McDougall pointed out that its payment currency representation is done. But its value essay store and bitcoin are the basis for the whole industry. “You should have a part of it in your portfolio,” he added.

McDougall spoke with Kitco News on the side of the Consensus 2022 conference in Austin, Texas, June 9-12. They also provided additional commentary after the conference dissolved into the crypto space.

Disclaimer: The opinions expressed in this article are those of the authors and may not be reflected Kitco Metals Inc. The authors have made every effort to ensure the accuracy of the information provided; However, Kitco Metals Inc. Nor does the author guarantee such accuracy. This article is strictly for informational purposes only. It does not appeal to any exchange in goods, securities or other financial instruments. Kitco Metals Inc. And the authors of this article do not accept the offense for damages and / or damages caused by the use of this publication.

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