The crypto market has not recovered from the rampage of the FTX collapse properly. As investors struggle to regain confidence, the chief of IMF, Kristalina Georgieva, has warned of an upcoming global recession. Not only are global economies expected to suffer, but the jitters might be felt by the crypto market as well. Georgieva has made it clear that global economies would face a challenging year.
China already experienced a major slowdown the previous year, and it is expected that the USA and Europe would follow in similar footsteps. However, the effects of the slowdown can already be witnessed in the UK. The main culprit of such an economic dilemma is the war between Russia and Ukraine. Similarly, the IMF chief also warned that 2023 would be a tough year than the previous one. Emerging markets are expected to be affected due to struggling major economies.
What Might the Warning of IMF Mean for the Crypto Market?
IMF believes that almost one-third of the global economy will suffer from recession this year. It is expected that the UK would be in recession by the end of this year. As long as the US is concerned, It might manage to avoid the phase. Furthermore, the IMF chief mentioned that the FED might have to impose tighter control over Interest rates. The FED increased interest rates numerous times the previous year and it is believed that it might control inflation in the US.
Cryptocurrencies have never traded in a recession and there is little to no evidence regarding how they might be affected. As long as the investors are concerned, they might have a hard time investing and trading. On the other hand, cryptocurrencies like Bitcoin might establish a reputation for themselves as being the hardest asset.
At the same time, the purchasing power of a common investor in a recession is still a matter of conjecture. According to a number of analysts, it is believed that cryptocurrencies will not perform well throughout 2023. IMF’s warning for a global recession might be another reason for a crypto meltdown. However, cryptocurrencies are expected to lose further value before they start recovering. All an investor can do is sit back and wait for the situation to stabilize. Even if they do plan to invest, they must do it carefully as the crypto market is highly volatile.
