As talks of a fast-approaching recession are gaining momentum, everyone is sharing their views on how it will impact the whole world. New International Monetary Fund (IMF) Managing Director, Kristalina Georgieva claimed that growth in 2019-20 is expected to fall to its lowest level ever since the start of the decade. And, 90 percent of the world will face a slowdown.
Earlier, eToro’s senior market analyst Mati Greenspan also expressed his views on Bitcoin’s future at a free webinar. During the discussion, Greenspan divulged the factors that could impact the short term prices of Bitcoin when the yet to take place halving will be priced in. He also shared how the recession will influence the long term prices of Bitcoin and the Bakkt effect.
He also discussed two of the most important issues that require immediate attention all across the world. Greenspan stated, “Bond yields have started to invert and there’s low-interest rates everywhere.”
According to an analyst, in a bid to cover the fragile spots in the European Union’s economy, the European Central Bank (ECB) has also already begun to print billions of Euros every month.
When it comes to the US, the opposite is taking place to tackle the present scenario. Here, the Federal Reserve has been mulling to bring down the balance sheet instead of printing more currency. In the last couple of months, the Fed has taken key initiatives to bring down interest rates yet again to boost the economy.
Meanwhile, if the viewpoint of Greenspan is to be believed, the strategies adopted by the Fed have shown positive results. He stated, “Since the financial crisis, stocks have been growing steadily.” The strategist claims that amid the global slowdown, several economies are printing more currencies and sending it to the stock market directly.
If things turn gloomy, there is space for a major decline in the stock market, with a significant decline of nearly half of the entire present market value. As long as there is no printing of currency and pumping it into the stock markets, the market may witness growth.
He also explained what would happen in the long run if currencies continue to get printed. Greenspan said that the scenario would cause a currency war wherein every country will try to devalue their currency to avail maximum advantages from trade.
Japan has emerged as the first country to devalue its currency Yen against the US Dollar. It is expected that China and other countries may follow the same.
Greenspan said, “Brexit is a smoke and mirrors situation as the British Central Bank hasn’t been pumping money into the economy.” He said that this method provides more space to Britain and helps it avail more benefits from the weakened currency. Greenspan said that Britain’s monetary policy is far stricter than the EU. He says that if money can control economic success, then monetary policy can also control the path to success.
Greenspan also shared views on how to protect value. He insisted on diversification and making short bets against the market. He claimed that if investments are made in various opportunities, it will put investors and traders in a better position in the long run as risk also gets diversified.
Yellow metal like gold has been faring really good of late and provide a secure hedge against the fragile assets. The prices of gold have been in the upward direction since 2019 and witnessed a rise of over 20 percent. Similarly, silver prices are also rising. Crude oil has emerged a volatile investment amid some threats following the drone attacks on Saudi Arabia.
Greenspan also spoke on how Bitcoin would react to the global slowdown. According to him, if the global slowdown is gradual and the Fed can control inflation, Bitcoin may witness growth just like stocks. However, in the case of hyperinflation, Bitcoin is expected to behave in an aimless manner. But, there is no sign of such scenario happening in the near future. During severe recession, Bitcoin may face a bearish season as stocks are likely to decline due to money hoarding.