Opportunity or threat? What to expect from the recession and the future price of bitcoin

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By TP

The price of bitcoin (BTC) is currently around USD 60,000, a value that marks a downward trend, which takes the digital currency out of an upward curve that promised to break the historical maximum again. The change of direction in the bitcoin market is related to news that points to the fact that the United States economy is on the verge of a recession. A fact that is generating fear among investors and that must be a series of changes in the global financial landscape. It is a process whose consequences are not entirely easy to predict, and that necessarily influence the price of the currency created by Satoshi Nakamoto now that the market has a powerful presence of American investors. As reported by this media, one of the main factors that is influencing the price of bitcoin has to do with some decisions on monetary policy taken by the United States government, which does not plan to lower interest rates in the short term. Added to this is the debt crisis and inflation, along with a set of macroeconomic indicators which raises fears of an increase in unemployment and a severe crisis in the real estate sector. This has significantly affected both to stock markets like those of cryptocurrencies.

The crisis favors the adoption of bitcoin

Despite the panic that the situation generates, some analysts see the situation as an opportunity for bitcoin investors. They think the possibility of a weaker US dollar and an upcoming interest rate cut by the Federal Reserve could boost cryptocurrency. They also argue that inflation will become another major driver of BTC adoption, a trend that many are already predicting amid the rise of the US national debt, which has already reached a record high of $35 trillion. Other experts believe that these facts will give bitcoin «a unique opportunity» to disassociate oneself from the actions. They believe that the outlook is more optimistic, in view of the US presidential elections that will be held in November. All this, considering that the statistics indicate that Donald Trump will probably win, who is expected to fulfill the promise to empower the ecosystem of cryptocurrencies.

There are some indicators against

Dam Dolev of Mizuho Securities has a different view of the consequences of the economic crisis. The analyst explains that if unemployment increases because people lose their jobs, many will be forced to liquidate their holdings in cryptocurrencies increasing supply and driving bitcoin down. In this regard, researchers such as Markus Thielen, from the firm 10x Research, expresses his concern about the divergence between the performance of the stock market (driven by enthusiasm around artificial intelligence) and the indicators that predict a weakening of the economy. Thielen draws attention to the Institute for Supply Management's index (PMI), a key economic metric that shows manufacturing sector purchases. «The indicator, currently on the decline, is giving worrying signals that have had repercussions on several risk assets, including cryptocurrencies.» The contraction in the PMI may have an impact on the price of BTC, as he anticipates a slowdown in the expansion of the economy. The pessimistic outlook is reinforced by the increasing likelihood of a recession, a scenario that has historically been accompanied by significant declines in the stock market. If this economic forecast materializes, 10x's report suggests that bitcoin could face a significant fallHowever, even though the digital currency is still considered to have the potential to maintain its value, Investors are advised to remain cautious and take into account broader macroeconomic and market dynamics.

Political support, upcoming economic indicators, and major cryptocurrency unlocks will play a crucial role in bitcoin price movements in the coming weeks. 10x Research Report.