The Netherlands is officially in a recession – what does that mean for Bitcoin?

It’s been a while, but it’s here now; The Netherlands is officially in an economic recession. It might sound worse than it is right now, but it could ultimately impact financial markets, including crypto.

Dutch economy shrinks

Statistics Netherlands (CBS) has calculated that the Dutch economy has been contracting for two consecutive quarters. This means, by the most commonly used definition, that we are officially in a recession. Now this definition is not a hard rule, but a rule of thumb, the requirement of these two quarters was only set once as a limit.

The economy shrank by 0.3%. In addition, the economy has been stagnating for four quarters, with gross domestic product (GDP) shrinking by 0.3% compared to the second quarter of 2022.

When you hear the word recession, you probably think of the 2008 credit crunch or the coronavirus pandemic, but for now things are a lot less serious. There is still a shortage of workers on the labor market. The number of vacancies fell slightly, but so did the number of unemployed. So little has changed on the web.

The situation is also significantly different abroad. The GDP of the United States, France and Belgium grew by 0.6%, 0.5% and 0.2% respectively. The euro zone as a whole remained at 0.0% growth, the Netherlands is doing comparatively worse.

Nevertheless, the Dutch economy has grown faster than most European countries since the end of 2019; CBS therefore describes the situation as a “mild cold”. This is also reflected in the number of investments within the Netherlands, which grew by 1.3% compared to the previous quarter.

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What Does a Recession Mean for Bitcoin?

The market for Bitcoin (BTC) and other cryptocurrencies is generally considered to be a very risky market. That could mean people are selling as a precaution. Because people are spending less, and that generally means they are less willing to put money into risky assets.

The fact that other countries’ economies are still growing suggests we don’t need to worry too much for now. Our frog country may not have that much direct impact on global markets either. Nonetheless, dark clouds are gathering in the sky, as there are also signs elsewhere in the world that the economy is slowing down. Economists estimate the probability of a recession in the US within 12 months at 60%. A major reason for this is that Americans have less and less savings and therefore need to save.

Based on the past, it would be beneficial for crypto if central banks decided to turn the money printer back on to avoid a deeper recession. It’s also possible that the banking sector will run into trouble again. Should this happen, it could also result in investors returning to the crypto market.

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