TL;DR
- Markus Thielen, head analyst at 10x Research, warns that investor excitement over a bullish Bitcoin surge may be premature due to growing signs of a global recession.
- While recessions often lead to monetary stimulus that can benefit Bitcoin, in the short term the asset could face bearish pressure.
- Despite the weakening dollar and expectations of interest rate cuts by the Federal Reserve, current conditions do not yet favor an immediate breakout for BTC, which is hovering near $82,295.
The possibility of an imminent recession in the United States is starting to impact Bitcoin price forecasts. Markus Thielen of 10x Research noted that credit spreads (difference between the yield on a corporate bond and the yield on a government bond) are widening, a clear signal that economic anxiety is sinking in. According to him, expecting a “bullish impulse” is premature in a context where central banks may delay their response and financial conditions still lack the necessary stimulus.
Bitcoin, trading around $82,295, has historically reacted with initial pullbacks following interest rate cuts or significant devaluations, especially from China or the Federal Reserve. Thielen argues that the first rate cut often confirms economic weakness, which is not favorable in the short term. Therefore, although the long-term outlook might be promising, the asset could remain under pressure for several more months. In this scenario, institutional investors might become more cautious, postponing entry or diversifying into more defensive assets while waiting for clearer signals from the market. Retail traders, meanwhile, could fall into volatility traps if they assume a rally is inevitable.
Furthermore, the current macroeconomic environment presents mixed signals. On one hand, the core Consumer Price Index (CPI) rose just 2.8% year-over-year in March, the lowest since 2021, fueling calls for a more accommodative monetary policy. On the other hand, the Federal Reserve remains cautious regarding possible rate cuts, extending the climate of uncertainty. Crypto markets could find themselves trapped between optimistic expectations and harsher economic realities, complicating the path toward a sustained rally in the short term.
Dollar Weakens, But Uncertainty Remains
The weakening dollar has also sparked mixed reactions. The DXY Index sits at 100.337, down 2.92% in just five days. Some analysts, such as The Kobeissi Letter, noted,
“The US dollar has exited the room. Once again, something is broken.”
Meanwhile, Robbie Mitchnick, head of digital assets at BlackRock, recently stated that a recessionary environment could be a powerful catalyst for Bitcoin. However, it all depends on how and when the Fed acts, as current expectations show a 64.8% chance of no rate cut at the May meeting.
