Bitcoin may not be a safe investment in a recession due to high volatility and correlation to tech stocks.

From Nasdaq

August 13, 2024 4:41:53 pm:

Fears of a recession rise as experts question the timing of Federal Reserve interest rate cuts. Amid economic uncertainty, is bitcoin still a sound investment? Bitcoin has shown resilience in 2024, but some argue it may not provide sufficient protection during a recession, as seen with past price drops.

Bitcoin’s recent drop to below $50,000 coincided with market turbulence due to recession fears, geopolitical instability, and Japan’s index plunge. Despite this, as of August 19, bitcoin was priced at around $59,000, up 100% in the past year but down 11% in the past two weeks, per CoinGecko.

Experts caution against investing in bitcoin in the event of a recession, citing high volatility and correlation to tech stocks. As a speculative asset lacking intrinsic value or income generation, bitcoin may not weather economic uncertainty well, according to finance professionals. Bitcoin behaves more like a risky growth stock than a stable currency.

Many view bitcoin as a proxy for Big Tech, rising and falling with market sentiment. In times of economic hardship, bitcoin may not perform well, as it relies on continuous investment for growth. Experts recommend cautious investing, as bitcoin’s value is dependent on market sentiment and speculation rather than company fundamentals or innovation.

Some buy bitcoin as a speculative asset, which could lead to increased selling during times of financial strain. In a recession, people may be more inclined to sell bitcoin for quick cash to cover necessities, driving down its value. Thus, bitcoin’s speculative nature may make it a risky investment during economic downturns.

Read more at Nasdaq: 3 Reasons Why Bitcoin Could Be a Risky Investment if Recession Is Predicted