Recent economic forecasts are painting a grim picture, with a significant chance of a US recession looming large. This uncertainty has put Bitcoin on high alert, leaving investors wondering what the future holds.
Recession Fears Surge
President Trump’s new tariffs have sent shockwaves through the economy, causing a major spike in recession predictions. Several sources now put the odds of a recession above 50%:
- Kalshi: 53% (an 8.1% increase)
- Polymarket: 54%
- Larry Summers: 50%
- JPMorgan: 40%
- CNBC Fed Survey: 36%
- Moody’s Analytics & Pimco: 35%
- Goldman Sachs: 35% (up from 20%)
JPMorgan warns that these tariffs could lead to a massive $660 billion annual tax increase on Americans, potentially boosting inflation by 2%. The risk of retaliation from other countries adds further uncertainty. Goldman Sachs predicts a 35% chance of a recession within the next 12 months, citing weakening consumer and business confidence.
What This Means for Bitcoin
The uncertainty is causing jitters in the crypto market. Renowned trader Bob Loukas suggests that the “buy the dip” strategy might not work in this environment and that bonds might be a safer bet. He acknowledges the difficulty in predicting Bitcoin’s behavior, noting that while it could act as “digital gold,” the administration’s policies make its future uncertain.
Other experts share similar sentiments. Aksel Kibar agrees with Loukas’ assessment. LondonCryptoClub points to UBS’s prediction of Fed rate cuts, suggesting that if the Fed considers tariff-induced inflation “transitory,” Bitcoin could see a significant rise. However, this scenario is contingent on the Fed prioritizing growth over inflation control. Macro analyst Alex Krüger warns that Fed cuts during a recession are typically bearish for Bitcoin.
Powell’s Speech: A Crucial Moment
Federal Reserve Chair Jerome Powell’s upcoming speech is highly anticipated. His comments will be crucial given the conflicting pressures of high inflation and potential economic slowdown caused by the tariffs. The speech is considered pivotal, potentially influencing Bitcoin’s trajectory significantly.
At the time of writing, Bitcoin was trading at $83,197. The coming weeks will be critical in determining how these economic headwinds will impact the cryptocurrency market.
