Debate on using bitcoin as recession hedge resurfaces with mainstream legitimacy, despite recent drop.

From Nasdaq

August 19, 2024 12:27:33 PM:

Experts are divided on the U.S. economy’s direction, with a debate on if bitcoin and cryptocurrencies can serve as recession hedges resurfacing. Recent institutional adoption and SEC approval of bitcoin and ethereum ETFs have brought mainstream legitimacy to the crypto space. Bitcoin saw a 20% drop in early August, but experts still see it as a good hedge due to its scarcity.

Peter Eberle of Castle Funds predicts that if the U.S. enters a recession, the Federal Reserve will drastically lower interest rates, leading investors to move funds into riskier assets like bitcoin. However, David Materazzi of Galileo FX warns against viewing bitcoin as a safe haven due to its extreme volatility and speculative nature compared to gold.

In the long-term, experts believe bitcoin will function as a hedge, though the short-term outlook is akin to a tech stock with fluctuations. Zach Pandl, head of research at Grayscale, advises investors to hold a diversified portfolio of assets and avoid market timing during economic downturns. Altcoins and stablecoins carry their own risks and may not offer the growth potential of bitcoin.

Read more at Nasdaq.: Are Bitcoin and Other Cryptos Good Hedges During a Recession? Experts Weigh In