Bitcoin price on thin ice, economic signals point to recession

Could the Bitcoin price be in serious trouble soon? We have seen massive increases in the last few weeks, the mood is extremely optimistic and these are often times when dangerous things can happen. Everyone seems to be assuming that the Federal Reserve’s first interest rate cuts will have a positive impact on the market, but the indicator below advises us to be cautious.

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Source: EPBResearch

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Is a recession coming?

This is the Conference Board Leading Index (CBLEI), which is generally very reliable as a predictor of recessions.

As of October, this indicator has fallen for the 19th month in a row (!), which means that economic conditions are worsening. This 19-month record was only broken in 2008, the year of the credit crisis, and during the 1974 recession.

The indicator gives a recession signal as soon as CBEI growth falls below -4.5%. In October, that figure was -7.3%, marking the 13th consecutive month in which the index issued a recession warning.

Now, of course, the big question is what this development could possibly mean for the Bitcoin price.

Are Bitcoin prices coming?

If we experience a severe recession, as CBLEI seems to predict, Bitcoin price could be in for a tough time. The good thing is that interest rate cuts won’t be long in coming and with a little patience we will (probably) return to better times.

Also, don’t forget that the US spot Bitcoin ETF will most likely launch next year. Another Bitcoin halving is planned for April 2024 and we can therefore expect interest rate cuts from the US Federal Reserve.

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Especially if we have a recession soon. That would mean that the US Federal Reserve would have to step on the brakes significantly more and phase out the money printers again. Even given America’s enormous national debt, there is a good chance that interest rates will have to be lowered in the foreseeable future.

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