While a lot of people below cryptocurrencies could replace fiat money, these digital coins are still to stand the certain test of specific economic conditions. One such adverse situation is that of a recession when a business cycle contraction takes place which results in a general slowdown in economic activity. According to a recent survey conducted by FundStrat, which covered some interesting views of people on cryptocurrencies, the majority of people and institutions believed that prices of cryptocurrencies would rise if there was a recession.
Institutions more confident of price rise than common public
The survey considers two sets of responses for every question, one from the institutions and second from the general public by way of Twitter. When asked about the recession and the reaction of cryptocurrency prices to it, 72% of the institution said that prices of cryptocurrency would rise while 28% denied it. The same question yielded 5382 responses on twitter out of which 59% people said the believed the prices would rise. The report further stated that if twitter spread was subtracted from the institutional answers, the result should that Institutions were more confident prices rise in a recession…
To explain in a recession- according to definitions when there is two-quarter of negative growth in GDP- the prices of stocks tend to decline due to degrowth. This makes people switch their bets out of equities and move it to haven assets such as bonds and gold. Now with the emergence of cryptocurrencies, we have one more haven asset and hence many believe if there is recession people will start hoarding cryptocurrencies taking their prices higher.
Survey reveals some interesting facts
The survey had some fabulous questions which captured the exact mindset of what people in general and institutions think about cryptos. Some of the interesting questions that were included in the survey included When and at what price bitcoin will bottom, what problems was ICE’s new venture Bakkt solving and what would be the ultimate consequence of US strict regulatory stance on cryptos?
The final result and conclusions of the survey were:
- Macro Factors impacting crypto: Both Institutions and Twitter (CT) rank Central Banks (#1) and Emerging markets (#2) as the two most influential factors impacting crypto. Institutions ascribe
greater weight to geopolitical tensions vs CT.
- Bitcoin Bottom? Institutions Say YES, Twitter Says NO—54% institutions believe BTC
CRYPTO POLL (2 of 6 questions):
Do you think Crypto prices rise in a recession?
— Thomas Lee (@fundstrat) September 30, 2018
bottomed vs 44% CT.
- BTC by YE 2019: 57% of institutions see Bitcoin >$15,000 by year-end compared to 40% of Twitter.
- Favorite Token: Of 15 tokens shown, 59% of Institutions chose Bitcoin while Twitter chose XRP (46%).
- Most polarizing token? XRP. On Twitter, 46% chose XRP as their favorite and 31% said it made “least sense.”—no other token came close. Even 28% of Institutions also said XRP made the least sense and zero institutions picked it as their favorite token.
Conclusion according to the report was
- INSTITUTIONS SIGNIFICANTLY MORE BULLISH (vs CRYPTO TWITTER) ON BTC. The majority of institutions think BTC has bottomed while the plurality of Twitter sees BTC bottoming in 2019. And Institutions see significantly greater upside to BTC prices by YE19. Given that institutional inflows likely increase strongly in 2019 (Bakkt, etc, the report believed BTC will be the primary interest for institutional investors—hence, should meaningfully outperform.
- CONTRARIAN CONCLUSION: XRP IS LEAST LIKED AND MOST POLARIZING—A CONTRARIAN BUY. Clearly, the crowd does not like XRP, for multiple known factors (the centralization of XRP, tenuous ties to Ripple, etc) but given the polarization and the fact that 1/3 of institutions consider it “least understood”—it makes the analysts believe this may be a contrarian buy signal.
The FundStrat survey results have given some amazing outcomes and we will have to see how much of this actually turns out true. But if the conclusion is to believe BTC and XRP clearly stand out as best bets to buy
DO you think the views expressed in Fundstrat survey are correct? Do let us know your views on the same.
Disclaimer The views, opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of CoinGape. Do your market research before investing in cryptocurrencies. The author or publication does not hold any responsibility for your personal financial loss.
Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.