The bitcoin price yesterday again fell below the psychological $10,000 mark before rebounding, swinging more than $1,000 per bitcoin in under 24 hours and leaving market watchers with whiplash.
Now, amid fears the world economy could be tettering on the edge of a recession, a prominent venture capitalist and bitcoin investor has warned a “severe” financial crisis would weigh heavily on the price of bitcoin—and perhaps plunge it back into a bitter bear market.
“When you think about really severe crises taking place, a liquidity crunch, another global financial crisis, I think that bitcoin will struggle to do very well from a price perspective,” Spencer Bogart, a general partner at venture capital firm Blockchain Capital, told Bloomberg, a financial newswire.
An array of economic indicators have recently triggered alarm bells that the world’s economy could be about to stall.
Earlier this month, the closely-watched U.S. bond yield curve turned negative, meaning the cost of borrowing money for the U.S. government was lower over the longer-term than the shorter-term.
U.S. president Donald Trump meanwhile shocked the world’s financial establishment by putting pressure on the U.S. Federal Reserve to cut interest rates.
Elsewhere, Germany, the economic engine of Europe, recorded a drop in its gross domestic product during the second quarter of 2019, with many economists expecting Germany’s economy to contract again in the third quarter and the country to enter a technical recession.
Bitcoin, which was created amid the 2008 global financial crisis, is often touted as an alternative to the traditional finaincial system, but burgeoning cryptocurrency adoption from major financial institutions has somewhat tied it to the mainstream finanial system.
“I think longer term bitcoin will absolutely be a safe haven,” Bogard said, despite bitcoin continuing to swing wildly in price over recent months and adding he is “not convinced that we have full economic crises on the horizon now.”
“I mean as it grows up the adoption curve we see bitcoin kind of evolving as it goes. So I think right now it is kind of in this intermediate state right now where you really have to think what the risks are and how severe are they. So I think that when you have looming risks of monetary devaluation, things like this, bitcoin certainly looks very attractive, and I think that was a large driver of the recent run-up in price.”