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Bitcoin eyes gains as US recession becomes likely scenario

Bitcoin eyes gains as US recession becomes likely scenario

GrafaGrafa2025/05/02 07:10
By:Mahathir Bayena

Bitcoin (CRYPTO:BTC) may benefit from growing concerns that the US is heading toward a recession in 2025, according to market observers reacting to recent macroeconomic data.

Analysis from The Kobeissi Letter suggests that a recession is now the “base case scenario” for the US economy, placing the Federal Reserve in a difficult position as it attempts to manage both inflation and rising unemployment.

US Q1 GDP fell below expectations, shifting into negative territory instead of the projected 0.3% growth.

This development, alongside a spike in the Fed’s preferred inflation gauge, puts policymakers in what Kobeissi calls the Fed’s “worst nightmare.”

“The Fed must pick between containing either inflation or unemployment,” the commentary stated.

“If interest rates are not reduced, GDP will likely weaken further and unemployment could rise. If they are cut too soon, inflation could rebound.”

As the Federal Reserve approaches its June Federal Open Market Committee (FOMC) meeting, attention turns to whether a 0.25% rate cut will be implemented.

Data from CME Group’s FedWatch Tool showed a 63% probability for such a cut at the June 18 meeting, up from 57% the previous day.

“Push coming to shove in terms of economic data rate cuts. Fed will still be concerned about price pressures but more so about weakness within the economy,” popular trader Skew noted.

Meanwhile, crypto analyst Michaël van de Poppe pointed out that a recession could trigger policy easing.

“The rumours for a potential recession is increasing, which should strengthen the thesis for the FED to loosen up the policy,” he wrote on X.

At the time of writing, the Bitcoin (BTC) price was $96,975.68.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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