Bitcoin (BTC) is expected to benefit from a potential economic recession in the United States becoming a 'basic scenario'. This is because recent economic indicators and resurfacing price pressures have significantly limited the Federal Reserve's policy maneuvering.
Major trading analysis platforms, including The Kobeissi Letter, warned that the U.S. economic situation is moving towards the Fed's 'worst-case scenario'. In particular, the possibility of inflation worsening due to trade tariffs is increasing, deepening the Fed's dilemma between price stability and economic stimulus.
The latest macroeconomic indicators, such as the Fed's preferred inflation index and first-quarter GDP figures, support these concerns. The first-quarter GDP recorded a negative growth, contrary to the initial expectation of a 0.3% positive growth, while price pressures are simultaneously resurfacing. The Kobeissi Letter assessed that "the Fed is facing a situation it cannot respond to" and that "policy options are very limited".
While this economic environment may adversely affect risk assets, there is a perspective that it could be positive for some assets like Bitcoin. Particularly, if the Fed shifts towards lowering interest rates or increases liquidity during an economic downturn, the cryptocurrency market may benefit indirectly.
The protectionist trade policy being pursued by the Trump administration is also identified as a factor increasing economic uncertainty. Experts are gaining momentum in their view that alternative assets like Bitcoin could maintain a strong trend in a 'composite recession' environment where inflation rises again and unemployment increases.
The industry believes that if the Fed makes a mistake between tightening and economic stimulus, the attractiveness of cryptocurrencies as a means of risk aversion could become more prominent. As financial market instability grows, the possibility of digital assets like Bitcoin emerging as an 'economic safety net' is also increasing.
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