One area that has been popular in the field of cryptocurrency is that Bitcoin will be the cryptocurrency that has benefited the most during the next financial crisis. This is mainly because ordinary citizens lose confidence in large financial institutions and instead believe that they are completely under their control and do not need third parties.
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Bitcoin has been touted as a currency that frees people from the shackles of centralized systems, and Erik Voorhees, CEO of Shapeshift, the leading cryptocurrency trading platform, spoke on his social media. at this point.
Recently, Narayana Kocherlakota, former president of the Minneapolis Federal Reserve in the United States, published an article in Bloomberg entitled "The Fed needs to fight the next recession." Kocherlakota said that considering the Fed's ability to increase economic growth by lowering interest rates, "it can be said that the Fed's firepower will be weaker than in any previous recession."
The former president explained that during the Internet bubble burst in the first decade of this century, in order to ensure that the unemployment rate remained below 6%, the Fed had to cut interest rates by more than 5%. However, he said that a 5% reduction in the real estate bubble did not produce the same effect, and the unemployment rate rose by double digits. He further added that
“It seems that the neutral interest rate in the next few years may be as low as 2.5%. Neutral interest rates are the starting point for the central bank in the next economic downturn. Therefore, unless the Fed reduces interest rates to negative values (this seems unlikely) Otherwise, the Fed’s response may be only about half of the last two recessions."
In addition, Cochela Kota insists that this is not the only option the Fed can choose, adding that there are other options, such as buying bonds and mortgage-backed securities, to “depress long-term interest rates”. However, he said, “Many economists (including me) still don’t believe how much impact these initiatives have had or will have.”
In this regard, Erik Voorhees said on Twitter,
“Since the birth of Bitcoin, there has not been a global recession. Bitcoin will become an escape point the next time this happens.”
Twitter user Adrian Bye said:
“When you learned how a large number of banks were closed during the Great Depression and what financial transactions were completely frozen… this shows how important cryptocurrency is.”
EOS founder BM said on Twitter today that banking is a fundamental right, which is why we need cryptocurrencies. Bank closures and stops caused by the financial crisis do not exist in the cryptocurrency ecosystem. The cryptocurrency system can continue to operate in the event of an economic crisis without interference from the outside world. In the next global crisis, cryptocurrencies such as Bitcoin may indeed become a safe haven.