How will the recession impact crypto? Theses, questions, and lessons.

“The range of possibilities has narrowed.” Says Warren Buffett at Berkshire Hathaway’s shareholding meeting, referring to covid-19.

While that’s true for medical matters, I fear that the range of possibilities has widened for economic matters. No one has a crystal ball on the true extent of the economic damage for at least a few more months. Case in point, Lehman collapsed 6 months after Bear Sterns.

The Oracle certainly agrees: he did not deploy his pile of cash in March as he did in late 2008. Uncertainty is the only certainty.

Crypto is no exception. And that begs the question: how will our industry be impacted by this crisis?

Thesis 1: Stablecoins are the biggest beneficiaries.

If you talk to enough OTC desks, you’ll realize that stablecoins, not Bitcoin, are the most sought-after cryptoasset outside America.

However much QE money is being printed, the fact of the matter is that the world still views the USD as a great store of value, especially in times of crisis. A few dozens of EM currencies have depreciated >10% against the USD. And USD stablecoins are essentially “American bank accounts in your pocket”.