Bitcoin Down 20% From Peak Amid Recession Risks and Macro Uncertainty
Recession risks are prominent in market discussions, with Bitcoin down 20% from its peak. Macro analyst Tomas argues that the economic situation is not as severe as reported, despite signs of weaker growth expected in early 2025.
- Tomas noted US growth nowcasts have stabilized after a decline since February.
- The Citi Economic Surprise Index (CESI) has also steadied, indicating data releases are aligning more closely with expectations.
- Markets became defensive earlier this year, but recent indicators show less deterioration.
Bitcoin's Current Context
Tomas draws comparisons between the current environment and past market downturns in Summer 2024 and late 2018. Each instance involved significant market corrections sparked by recession fears.
- In Summer 2024, concerns over growth led to a 10% equity market drop.
- Late 2018 saw a similar correction due to trade tensions, resulting in a 10% initial decline followed by a deeper 15% pullback.
- Currently, equity markets have experienced about a 10% decline, while Bitcoin has similarly dropped around 30% this period.
Tomas favors a scenario resembling Summer 2024 rather than the more severe outcomes of late 2018, citing several factors:
- Recent easing of financial conditions compared to tightened conditions earlier in the year.
- US dollar has weakened, contrasting with its rise during 2018.
- Leading indicators suggest ongoing business cycle expansion.
- Favorable seasonal patterns for US equities typically rebound following weak periods.
- Tight credit spreads indicate stable credit markets without severe distress signals.
Tomas expressed weariness with tariff discussions, emphasizing April 2 as a crucial date for potential clarity in economic policies.
Bitcoin's current trading price is $86,557.
