Global Recession, Inverted Yield Curved: What This Means for Bitcoin (BTC)

Published on Unknown by Cryptovest Staff

US treasury bonds followed the global trend to enter the territory of inverted yield curves, signaling recession.

Reversed yield curves have spooked economists for a few months now, originating in Japan and Europe. But now, US government bonds are sporting a reversed yield curve, where short-term debt has a higher yield in comparison to 10-year government bonds.

https://twitter.com/rafzalan/status/1161709029577543680

The events mimic the behavior of US government bonds not seen since the fall of 2007, which preceded one of the largest global financial crises.

Usually, long-term debt will have a higher yield to pay for the risk taken - but now, taking a risk with the US government means the return is lower, and can even be negative. Crypto analysts see this as a pivotal moment forBitcoin (BTC), which may see increased interest in the case of a global crisis.

BTC has been around for a decade and has existed in a climate of constant growth and quantitative easing. If a crisis is coming, this will be a brand-new test for the digital coin, which is currently valued at a much higher market price. Back in 2009, BTC was just starting out, with rock-bottom valuations. Currently, a much larger wealth has been brought to the BTC markets.

Gabor Gurbacs, digital asset strategist at Van Eck, has noted that the current financial conditions may signal a boost to BTC investments:

https://twitter.com/gaborgurbacs/status/1161612848390451200?s=20

So far, there is no precedent to define the link between negative yield curves and the behavior of BTC and crypto investors. But there is a possibility that falling stock prices and debt anomalies may bring more investors to digital assets.

BTC has its own set of risks that could wipe out wealth, as the asset is still extremely volatile. The news of a US recession looming and a global economic slowdown coincided with a slide in BTC prices, as the coin corrected deeply two days in a row, sliding from the $11,500 range toward $9,500 in a mid-week rapid sell-off.