Crypto and the Inverted Yield Curve
The monetary value of Bitcoin(BTC) is a result of fiat inflation. Over the past 10 years, BTC has seen increased value in countries who’ve faced or are facing economic hardships-Cyprus, Greece, and Venezuela. When a recession hits a country their fiat currency starts losing value, hence you need more cash to purchase your typical grocery list. When this has occurred, BTC has increased in value in recession-hit countries because it was a better store of value.
What does this have to do with an inverted yield curve?
The inverted yield curve represents the difference in yield rates of short and long term treasury bonds. It’s seen a lagging indicator for predicting recessions. When yield rates are higher for short-term bonds its a signal that investors are more optimistic about the state of the market versus the long-term. As a result, yield rates for long-term bonds become smaller and less desirable. The inverted curve occurred two years before the 2008 market crash and should be used in conjunction among other economic indicators to determine the potential for a recession.
Now, you know what an inverted yield curve is and how it relates to cryptocurrency!
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