Recession looms for the world economy as the second week of 2016 begins. Early on January 11th, the Shanghai composite index took a dive, plunging 5.3% on Monday morning. This caused quite a bit of downturn last week as the index plummeted severely—halting trading in the region two times. This Monday saw U.K. and U.S. markets opened above ground with the Dow futures and S&P 500 futures up 0.5 percent. Last week’s market tribulations have had no significant effect on the Bitcoin market and has increased speculation with those who believe that as traditional markets weaken the digital currency strengthens.
Bitcoin & FinTech Remain Strong
Bitcoin is up 0.6% this Monday as the second week of 2016’s global markets have begun. The currency, even after last week’s Chinese economy scare, has been quite bullish during the first days of the New Year. The price has maintained while venture capital within the FinTech and cryptocurrency industry continues to grow. The first week alone saw record funding within the financial technology and blockchain-based sector receiving more than $330 million. Companies like Gem and Zebpay showed the world that the money is still flowing into these startups.
Venezuelans Look to Cryptocurrency For Help
The economy in Venezuela is currently shuttering in debt as the country sold billions in gold this past October to prevent the country from defaulting. Now the PanAm Post is reporting that Bitcoin use in the region is doubling and has become the second biggest supporter of the digital currency within South America. “The SurBitcoin exchange is already the second largest in transaction volume in Latin America after Brazil,” said a Bitcoin advocate from the region to PanAm. “The growth is evident.” This growth has been fueled by the capital controls imposed across the country.
Can the Free-Market Fix It?
As everyone watches the central bank’s next move, the Adam Smith Institute (ASI) recently released a new report condemning the methods of centralized banking. Formed in 1977, the ASI is a public policy think tank located in the UK. The group has advised both government and non-government organizations. Central banking is coming under more and more scrutiny as their policies have so far not yielded the desired results with stock markets teeter-tottering on the brink of recession.
The advisory team at ASI believes that the Bank of England and the U.S. Federal Reserve has “done a very poor job of managing our money.” They believe that existing policy utilized by these entities needs to be “scrapped” and followed by a free-market approach. ASI says by manipulating the management of our money they have destroyed our economy with “created artificial booms, followed by genuinely painful busts, through decades of following their unreliable discretion.”
Emerging Markets are Here for a Reason
January 11th saw oil prices fall to a twelve-year low shaking investor confidence to the core. This makes small increases in the stock market look pale in comparison to the current price of oil. Recently, Morgan Stanley forecasted that barrels of crude could drop to $20 due to the devaluation of the Shanghai composite. Commodities all across the market have seen severe depreciation because of the slowdown in China’s economic growth and government intervention. Besides oil, copper has dropped to its lowest level since 2009 and most markets are seeing a steady decline after a minor positive uptrend Monday morning.
The ASI are not the only ones who believe there needs to be a change. Many people agree that central banking policy is not working for our world and a laissez-faire economy offered as the solution.
As the world economy flounders, superior alternative choices are emerging when and where they are needed most. The birth of Bitcoin amid the last financial crisis introduced the world’s first decentralized currency enabling a new form of free-market capitalism. After the crash of 2008, Satoshi gave people a choice to put their trust in math over fallible men and corrupt banks. With global markets in turmoil, this new digital medium of exchange is not only showing it can thrive in times of distress, but also provide an escape hatch for those who see the writing on the wall.
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