Experts from Fitch Ratings and other analysts warn about the potential economic downturn that could affect the crypto market. The market faces uncertainty as the global economy evolves and forecasts for 2025 are announced.
Start of a Bear Market
Early today, Ki Young Ju boldly declared the official onset of a bear market for cryptocurrencies. He forecasts a decline over the next 6-12 months based on on-chain metrics. However, the timing of bull markets remains elusive.
2025 Economic Projections
The U.S. is initiating a global trade war, sharply lowering world growth predictions. Fitch Ratings cites that both the U.S. and global growth will decrease, U.S. inflation will rise, and the Fed’s rate cuts will be delayed. These factors spell disaster for Bitcoin and cryptocurrencies, which have yet to be considered a safe-haven asset. In our December 2024 GEO report, we reduced our U.S. 2025 growth forecast from 2.1% to 1.7% and our 2026 estimate from 1.7% to 1.5%. These figures are substantially below trend and lower than the nearly 3% annual growth seen in 2023 and 2024.
Global Trade War and Crypto Markets
The effective tariff rate in the U.S. rose from 2.3% to 8.5% in 2024 and is likely to increase further. Tariffs on China are at 35%, with 15% on Canada, Europe, and Mexico, marking the highest rates in the last 90 years. These changes lead to rising consumer prices in the U.S. The forecasts for 2026 include three interest rate cuts anticipated after tariff-induced inflation raises by about 1 point.
The complex economic situation and increased U.S. tariff rates create uncertainty in the crypto market. Fitch Ratings forecasts underline risks inherent in the current global trade policy and its impact on the global economy.
