The coronavirus (COVID-19) pandemic shook economies and markets to the core all around the globe. Business confidence is low. Along with unanticipated lay-offs and factory closures, the situation might just be the perfect storm that would wreak havoc on the U.S. economy and the US dollar. How will it impact the crypto industry?

According to Jerome Powell, chairman of the U.S. Federal Reserve, the state may “well be in recession” already. He added, allaying fears that the damage could be irreversible:

“But I would point to the difference between this and a normal recession. There is nothing fundamentally wrong with our economy. Quite the contrary. We are starting from a very strong position.”

Indeed, economists in Bank of America have officially declared the U.S. to be in a state of recession, citing the rising unemployment as one of the gauges to how the recession would impact the economy.

Meanwhile, several measures have been employed by the Federal Reserve to cushion the US economy from wild market spirals. Last March 16, for example, the Fed cut interest rates on government borrowing to nearly zero.

This is done by many central banks in order to stimulate spending and investments.

BTC’s recent price movements

As you may recall, Bitcoin (BTC) fell to as low as US$4,000 [AU$6,500] last week. Similar cryptocurrencies like the ETH, EOS, and BNB experienced a huge price decrease as well. All of which began with the fall of the traditional investment markets like the Dow, Nasdaq, and S&P.

But just this week, BTC reclaimed the mid-$6,000 area. This price movement followed the announcement of the Fed that they will be injecting stimulus packages soon to strengthen the economy in weathering the market damage caused by COVID-19. The outlook of the fiat financial market still appears bleak as it is, however.

Witnessing this market situation, many from the community are starting to point to BTC as a ‘safe haven.’

What could be the case for BTC in case of a recession?

There are two ways the situation could play out. The bullish and the bearish case. Let’s start with the bearish case.

The Bearish Case

According to TradingView crypto analysts, an economic crisis will only drag the price of BTC down with it. If the public “is worried about a crisis and losing jobs, the last thing people want to do is speculate on some crazy cryptocurrency.”

This skepticism and lack of uncertainty over the future of the market could prompt many others to sell their cryptocurrencies just to make sure they can have food on the table.

The Bullish Case

A good bullish case for BTC could be seen from what happened in Venezuela and Zimbabwe, where BTC showed exceptional trading volumes.

In these places where markets are not functioning properly, fiat investments have become unreliable too. In such situations, more people could gravitate towards BTC as a reliable financial investment than the traditional ones.

BTC could suddenly be considered a ‘safe haven’ if the fiat market fails to prove its superiority over the crypto.

US recession’s impact on BTC still unclear

It is difficult to speculate how things would go from here.

But it is certain that the government’s approach in dealing with the economic impact of the virus, social amelioration packages, and how long the virus would go before it ends course, will remain as the factors to monitor in the coming days.

The halvening is yet to come, and a lot could still happen. It all boils down to how confident people would be on putting their investments in BTC.