Bitcoin Would Survive a Recession, But Ethereum May Not, Cosimo Ventures Analyst Affirms
A recent report made by Kyle Chapman, a partner of Cosimo Ventures, a tech venture capital company, has recently affirmed that Bitcoin has big chances of coming out alive of a recession. However, Ethereum, as the report states, will maybe not be so lucky as its bigger brother.
The argument is mostly that Bitcoin is fully decentralized and it is not linked to the stock market and its cyclical undulations. However, Ethereum may be more linked to the stocks market than we all used to think.
Despite the Federal Reserve chairman, Jerome Powell, affirming that there is no crisis in sight, nobody is really convinced of that. According to him, the growth will be slower than last year, which saw big growth in the economy, but this is simply no reason to believe that there is any chance of recession.
Chapman does not seem to believe that a crisis in the U. S. is nowhere near at the time. However, he believes that the crypto crisis can get even worse than it already is. This is good news, he affirms, though, saying that a “more disruptive market will separate the wheat from the chaff”. Only the strong would survive.
In the case of a crisis, Bitcoin is seen by Kyle Chapman as a safe haven for prices going down, despite the current bear market. Why? Because everybody would invest in Bitcoin to save their money from a recession, especially if it was caused by inflation. This is due to its decentralization and scarcity.
Also, its supply is not controlled by people but by the blockchain, which makes it even more independent from broad market pressures that could arise from a crisis. This, the analyst believes, could ramp up, even more, the price of the asset.
Ethereum Might Not Be So Resilient As Bitcoin
One of the most unique aspects of the predictions made by Chapman is that he is far from bullish in Ethereum as he is about Bitcoin in a possible crisis scenario. This, according to him, happens because Ethereum is not so detached from the stocks market as Bitcoin is.
Ethereum would underperform because it is more entangled with equity markets and it follows the broad stock-market trends. It is a very developer-focused and developer-dependant asset. If the companies are not well, Ethereum would also not be so well.
Ripple’s XRP, however, has more chances of surviving. Why? Because it is, most of all, a medium of exchange that operates away from the stocks market. However, the price of XRP would be very dependent on adoption, just like Bitcoin is. If people do not use XRP and decided to use other projects like JPM Coin (the not-so-crypto token created by JP Morgan), its value would go down the drain.
The top 3 assets by market cap are all very different and, therefore, they would act in a different way. If Chapman is right, then, Bitcoin would be the winner during a recession.