Wall Street analysts have increased recession odds, potentially impacting global financial markets, including the crypto sector. This development is particularly intriguing given the recent volatility in Bitcoin and popular altcoin prices.
New Recession Forecasts
PIMCO, JPMorgan, and Goldman Sachs analysts have raised recession probabilities to 35%, 40%, and 20%, respectively. Moody's economist Mark Zandi also estimates 35%. Factors cited include declining consumer confidence, government spending cuts, and Donald Trump's trade war. According to an Atlanta Fed estimate, the U.S. economy will contract by 2.4% this quarter.
Recession's Impact on Cryptocurrencies
During recessions, marked by high unemployment and low consumer confidence, cryptocurrencies like Bitcoin and altcoins might perform well. The U.S. Federal Reserve is expected to cut interest rates and restart quantitative easing (QE), which increases market liquidity.
Current Altcoin Market Situation
With rising recession odds, altcoins such as Shiba Inu, Dogecoin, Ripple, and Cardano have already experienced significant price drops. However, potential actions like creating a Strategic Bitcoin Reserve and future altcoin ETFs could boost crypto prices. Additionally, recent decreases in the U.S. dollar index and bond yields might prompt a more dovish Fed approach.
In light of increased recession forecasts, the crypto market faces notable challenges. Despite significant altcoin price declines in recent months, potential economic stimuli could catalyze growth in the near future.
