Quote from: pooya87 on Today at 01:25:12 PM

Quote from: dragonvslinux on Today at 12:07:33 PM

I'm sure most (including myself) would of wrongly claimed that inflation is good for Bitcoin, while now many still hold the belief that inflation is bad for Bitcoin,

My theory is that inflation is still good for bitcoin but there is a difference between inflation and recession and inflation with recession.
What we have is the last one meaning both inflation and recession at the same time.

During inflation people still have their jobs even though price of every thing is going up so they still earn money as before and can can think about investing it and hedging against inflation.
But during recession unemployment grows and people are earning less money so their main concern is their cost of living not investment which is why they liquidate their assets more during a recession, that is selling bitcoin among other things causing the dump.

What we have or are heading towards is inflation with recession specially when they keep increasing interest rates (that causes recession) to lower inflation that is already higher but it doesn't work well enough.

It's not that I don't understand the theory as to why Bitcoin would fall during a recession, it's that so far I see it as an unproven theory. Baring in mind there is a logical reason why markets fall during a recession, it's not just people liquidating assets to survive, it's that people are spending/buying less, there is no longer economic growth and therefore most markets won't grow either and neither will their share prices. With 50% of global wealth concentrated to 1-5% of the population who aren't seriously affected by recession (when it comes to cost of living etc), then half the sellers come from those minimising inevitable losses.

So in this sense, half will be selling due to cost of living crisis (inflation), the other half would be selling due to declining investment values (recession). But obviously this is dependant on those investments actually declining, otherwise there wouldn't be a reason to sell. For example Gold rises during a recession, or at least has in the past, but I don't believe this comes from 95-99% of the population suffering from inflation, but the 1-5% who can afford to invest in Gold who are experiencing a lack of wealth increase due to recession, ie mainly institutions. The reality is Bitcoin isn't disconnected from these wealth distributions either, with around 2% owning around 93% of all coins, or 0.36% owning over 80% even (which is an enormous difference compared to 1% owning 50%), and this doesn't even factor in that many will own multiple accounts either, so the split is probably more likely around 1% of individuals owning 95% of the coins imo.

My rambling point is I don't believe that Bitcoin is dependant on economic growth for it's own increase in value, just like Gold. Because it's value is based on scarcity, not on economic growth. It's only fundamental weakness imo would be for example increased energy costs and seeing a 80-90% correction in hash rate, that would certainly have the affects of continued downside price action, with more miners selling and mining companies going bankrupt etc, creating too much supply and not enough demand. But for all we know while 93% of the population are somewhat forced into selling due to inflation, the other 7% could well be buying more than usual causing the price to increase, especially if it becomes "immune" from recession in other markets, ie de-correlates (again) and instead correlates with Gold.

Either way I think by the end of the year things will become clearer if recession is to take hold. This year (the year after a 1 year bear market) is supposed to be a recovery year, whether that be going back to the upside (like 2019) or consolidating sideways (like 2015). So either the 4-year cycle will remain in tact, or Bitcoin will negatively affected by a recession and prices will continue to decline.

But for now, given Bitcoin has acted more or less "as expected" in 2022 irrespective of inflation, ie a 1 year bear market after it's bull market, I think it's too early to tell.