Fears of Recession in 2024: How Will Bitcoin and Gold Fare in This Scenario?

• Last week, JPMorgan Chase CEO Jamie Dimon warned about the possibility of further inflation and the likelihood of a recession, urging preparedness.
• Dimon emphasized the need for increased global funding to support initiatives like green economy, remilitarization, and energy crises.
• Blockstream CEO Adam Back expressed his belief that digital gold, namely Bitcoin, will eventually surpass physical gold in value.

Fears of a recession in 2024 are increasing in global markets. How will the gold and Bitcoin markets be affected in a potential recession? Expert opinions follow.

Recession Fears in 2024 and Assets

While Wall Street indices continue to demonstrate significant strength as the end of 2023 approaches, fears of a recession entering 2024 are driving the price of gold up to $2,100 per ounce. On the other hand, Bitcoin continues to achieve strong gains, surpassing $40,000.

Last week, JPMorgan Chase CEO Jamie Dimon warned about the possibility of further inflation and the likelihood of a recession. During the 2023 New York Times DealBook Summit in New York, Dimon expressed concerns about various inflation factors, calling for preparedness. He cautioned about the potential increase in interest rates that could contribute to economic downturn.

Dimon emphasized the need for increased global funding to support initiatives like green economy, remilitarization, and energy crises. However, he warned that these measures could potentially increase inflation pressures. As long as inflation concerns persist, gold and other commodities have shown strong gains in recent weeks. Bloomberg’s senior commodity strategist Mike McGlone believes that gold will likely outperform other commodities.

McGlone stated that gold has outperformed most commodities since the turn of the millennium. The recent recovery in commodity prices may have revived this determined trend in favor of the metal. However, as the end of 2023 approaches, there is a decline after reaching the longest levels against gold since 2008.

In an environment of high interest rates this year, Bitcoin has shown a strong recovery in 2023. The price of Bitcoin has risen by 150% since the beginning of the year, surpassing $40,000. On the other hand, gold, with a 16% return since the beginning of the year, once again demonstrates a clear difference in performance compared to BTC. The big question is whether this superiority will continue as we enter 2024 and whether it will exist in the event of any recession.

As is known, gold is a significant hedge against a recession, while Bitcoin has performed as a risky asset. Popular Bitcoin critic Peter Schiff says, “Gold is trading above $2,100 tonight, for the first time in its history. This is much more meaningful than Bitcoin trading above $40,000. Gold has gone completely crazy. In uncertain waters, Bitcoin needs to rally by more than 60% from here just to reach a new peak.”

Blockstream CEO Adam Back expressed his belief that digital gold, namely Bitcoin, will eventually surpass physical gold in value. He anticipates that this transition could occur within the current halving cycle, lasting about four years. Back currently estimates that around $700,000 per Bitcoin will be needed for this transition to occur. He suggests that Bitcoin could become a partial substitute, leading to market value intersections, as some individuals sell gold assets and invest in Bitcoin.

Bitcoin as an Inflation Antidote

Furthermore, Coinbase CEO Brian Armstrong, who sees Bitcoin as a remedy for inflation, states that cryptocurrency is considered a key to expanding Western civilization. He believes that cryptocurrency could be seen as an alternative to potential inflation in the U.S. and serve as a natural balance.

Armstrong sees the coexistence of cryptocurrency and fiat, with stablecoins like USDC playing a significant role between these two worlds. He views this transition as complementary for the dollar and beneficial for long-term American interests. The idea is still in the conceptual stage, and Armstrong acknowledges the need for various perspectives on the matter.