The price of bitcoin briefly climbed above $30,000 today, despite the possibility of a recession in Europe increasing by the day. Value Atlanta Fed GDP now the US economy is growing by 3.5% (see graph), Germany appears to be headed for a recession, UK economic growth is stagnant and macroeconomic data from China is increasingly weak.
In today’s macro update, we take a closer look at this data and conclude with the potential impact on the price of bitcoin.
Recession in the Eurozone?
The chart below shows the German manufacturing PMI, which came in with a score of 38.8 this month. This means that German industry is currently one of the most unhealthy industries in the world. Typically, a score below 50 indicates a recession (economic contraction).
Germany is known as the factory of Europe and in this respect it is extremely important for the Eurozone that German industry remains healthy. Now that is far from the case and this seems to be an important signal of a possible recession in the Eurozone.
As for the price of bitcoin, this is not good news. After all, a recession means unemployment rises and people have to sell their investments to keep their heads above water financially. The economic contraction in Sweden is also not a good sign for the European economy.
The impact of a European recession on the price of bitcoin
From a macroeconomic point of view, we are currently in a difficult position. The US economy is apparently booming, despite the US central bank aggressively raising interest rates over the past 16 months. However, economic growth in the rest of the world is beginning to take problematic forms.
The chances of a recession in the US appear to be diminishing, but that does not mean that a global “soft landing” is possible and that Europe too can escape a recession.
As for the price of bitcoin, it’s good if America manages to avoid a recession for as long as possible, while uncertainty in the rest of the world (Europe and China) puts potential further pressure on the price.
All in all, we also have to wait and see if America can stave off a recession. Yesterday the PMI (manufacturing health) stood at 46.4; while a score of 46.9 was expected.
🇬🇧US ISM PMI climbed to 46.4 in July!
📈 PMI 46.4 (est. 46.8, prev. 46.0)
📈Production 48.3 (prev. 46.7)
📈Orders 47.3 (prev. 45.6)
📉 Employment 44.4 (previous 48.1)
📈 Customer inventories 48.7 (prev. 46.2)
📈Prices 42.6 (previous 41.8)
📉Export orders 46.2 (prev. 47.3)
📊More details:… pic.twitter.com/b7rV53h9JG— MacroMicro (@MacroMicroMe) August 1, 2023
In this respect, we are in an uncertain global situation, which is not at all strange given the aggressive rate hikes of all the major central banks.
Also considering that Bitcoin, the S&P 500, and the Nasdaq all delivered massive gains in the first half of 2023, it wouldn’t be surprising if we see a weaker second half of the year.
