Unpopular Opinion. Bitcoin is a hypergrowth tech asset, and not necessarily a traditional recession-proof store of value, and we should be careful with the labels we put to it
First of all, before explaining why I believe this, I'll explain what I mean exactly by this.
In this sub, and everywhere in the crypto community, we keep hearing "Bitcoin is a store of value", "Bitcoin is digital gold" and similar things. According to Investopedia, a store of value is "an asset that maintains its value, rather than depreciating", and lists gold as an example. This does not necessarily mean that gold is a better investment than Bitcoin, in fact I believe the opposite, since its inception Bitcoin has been the asset with highest growth.
When we talk about a store of value, we tend to refer to some sort of asset that can provide a decrease in risk to your portfolio during turbulent times. We have very little data that could suggest that Bitcoin is recession-proof or an investment that you should make when your economy is going down, and in fact, most of the little data we have suggests the opposite.
Consider how gold behaved during the 2008 stock market crash. The Dow Jones dropped from 13k in April 28th 2008 to 6.6k in March 2nd 2009, in other words the stock market during that time period almost dropped 50%. In April 2008, gold was at ~1200, and in March 2009 if was at ~1100, with the lowest low reaching ~880 in October 2008, in other words, the price of gold dropped ~27%.
However, Bitcoin wasn't a thing during this time recession, and ever since then we have enjoyed the biggest bull market in American history, leading to all time highs, growth and returns in the tech sector. This was the time when Bitcoin was growing as well.
In fact, the only recession we have had since 2008 was the covid recession, and this is the little data we have about how Bitcoin behaves in a recession:
- Dow Jones dropped from 29.4k in February 10th 2020 to 19.2k in March 16th 2020 (lowest in this time period), a 35% drop.
- Gold went from 1570 in February 11th 2020 to 1487 in March 16th 2020 (lowest in this time period), a 6% drop.
- BTC dropped from 10.2k in February 11th 2020 to 5200 in March 17th 2020, a 49% drop.
In conclusion. While BTC has proven to be a great investment (and I will keep investing in it), so far there is no evidence that it will act against some sort of hedge against recessions or be a store of value. So far, the data we have is that it's behaving like a hypergrowth asset during the biggest bull market in history, but we should be careful suggesting people to buy BTC during times of uncertainty when they think the economy is going down, because there is no historical evidence that BTC will act as a hedge against a failing economy.