Cryptocurrencies did not have a good year in 2018. Something similar happened to stock markets. For example, after reaching a new high this year back in September, Nasdaq’s index fell 22%, entering a new bear market.
Nevertheless, the Nasdaq is not the only market that has registered important loses this year. The Shanghai Stock Exchange Composite is also down almost 30% from its year-to-date high. Many other indices behave in similar ways. In Germany, the banking sector is not performing well. German Banks Index has plummeted by 52% year-to-date.
The U.S. Federal Reserve (FED) has played an important role in the downtrend that markets took during the last months of this year. The FED increased the benchmark interest rate to 2.5% creating a negative sentiment among investors fearing for a slowing economy in the future.
Bitcoin (BTC) was created during the 2008 financial crisis in order to create a different financial world that does not depend on banks and other traditional financial institutions. However, it has never existed during a market crash. But this might be close to an end if the traditional financial system collapses once again. Several analysts in the crypto space are asking how virtual currencies would perform during a market crash.
In a recent Tweet, Travis Kling, Founder and Chief Investment Officer of Ikigai Asset, wrote that cryptocurrencies have never existed during a bear market in traditional assets. Because of this situation, it might be possible for Bitcoin and cryptocurrencies to be the best performing asset class in 2019.
Crypto has never existed during a bear market in traditional assets.
BTC was birthed at the very beginning of the largest monetary experiment ever- globally coordinated QE. Ending QE is causing pain
There is a significant chance Crypto is the best performing asset class in 2019 pic.twitter.com/vIdKTrm5sV
— Travis Kling (@Travis_Kling) December 23, 2018
There are other experts that believe that Bitcoin would see an increase in its price if there is a debt of currency crisis. Something similar to what happened to Venezuela, or to a lesser extent to Turkey and Argentina. In Venezuela, the inflation rate could reach 1 million percent or even more. Individuals are using Bitcoin (BTC) and other virtual currencies to save funds and make transactions. Dash is also a virtual currency used by many people in the country.
If the global economy enters into a moderated recession, cryptocurrencies could not work behave so positively. Investors would rather sell them to cover other losses and currencies will remain stable and without a deeper crisis.
At the time of writing, Bitcoin is being traded close to $4,250 and it has a market capitalization of $74 billion.
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