Bitcoin Faces Increased Risk as US Recession Odds Rise Above 50%
Following President Trump's "Liberation Day" tariffs announced on April 2, recession probabilities have increased sharply, impacting Bitcoin sentiment. Key statistics include:
- Kalshi's prediction markets now show a 53% chance of recession, up 8.1%
- Polymarket's odds are at 54%
- Larry Summers estimates a 50% likelihood
- JPMorgan forecasts a 40% chance
- CNBC Fed Survey indicates 36% probability
- Goldman Sachs revised its estimate to 35%, up from 20%
The tariffs impose a 34% levy on imports from China and 20% from the EU, with JPMorgan warning this could lead to a $660 billion annual tax increase and a potential 2% rise in inflation. Consumer confidence is declining, and retaliatory measures from trading partners may follow.
Goldman Sachs projects a 35% chance of recession over the next 12 months, attributing this to lowered growth expectations and deteriorating confidence levels.
Implications for Bitcoin
Trader Bob Loukas suggests a cautious approach, moving away from the "buy the dip" strategy. He notes that while Bitcoin may perform as a digital gold, its future remains uncertain due to economic conditions.
UBS global wealth management anticipates the Federal Reserve will cut rates by 75–100 basis points through 2025, which could positively influence Bitcoin if inflation is deemed transitory.
Macro analyst Alex Krüger warns that Fed cuts amid recession typically lead to bearish outcomes. The upcoming speech by Federal Reserve Chair Jerome Powell on April 4 is expected to clarify the central bank's stance amidst rising inflation and trade tensions.
As of now, Bitcoin is trading at $83,197.
