Despite recent economic contraction in the U.S., which has raised fears of a recession, experts believe this could benefit Bitcoin. André Dragosch from Bitwise argues that impending interest rate cuts and a weakening dollar may offer a favourable landscape for Bitcoin. With Bitcoin showing signs of decoupling from stocks and correlating more with gold, it may become a strategic asset in these turbulent times.
The U.S. economy has shrunk by 0.3% in the first quarter of 2025, leading to widespread concerns over a possible recession. Yet, some analysts suggest that Bitcoin could benefit from this downturn. André Dragosch, who heads European research at Bitwise, recent comments highlight elements like potential interest rate cuts and the dollar’s weakening, which could positively impact the cryptocurrency markets.
The initial reaction to the economic contraction saw Bitcoin’s price dip to about $93,300 on Wednesday, reflecting investor anxiety. But Dragosch presents a different perspective, stating that what appears bearish could actually serve as a “tailwind” for Bitcoin. He argues that the ongoing economic turbulence might not hinder Bitcoin’s growth and could instead encourage a bullish trend in the crypto market.
Market sentiment is shifting rapidly. Initially, high tariffs under President Trump’s administration sparked fears of prolonged interest rates. However, the narrative has flipped, with traders now anticipating earlier cuts by the Federal Reserve to help an ailing economy. A poll suggests a 58% probability that the Fed will lower its rates to between 3.75% and 4% as soon as July.
Lower interest rates generally enhance market liquidity, making borrowing cheaper—a phenomenon that usually supports riskier assets like stocks. However, Dragosch points out Bitcoin’s unique standing, explaining that unlike public companies, Bitcoin isn’t tied down by the same valuation pressures during tough economic times. This separation could be a crucial advantage in a recession.
What’s intriguing is that Bitcoin appears to be decoupling from traditional stocks, moving more in unison with gold—a trend that could indicate its increasing status as a safe haven asset. This aligns with a growing de-dollarization trend, as the U.S. dollar index has dropped by 8.3% since the year started. If the dollar continues to weaken, Dragosch suggests that Bitcoin could emerge as a protective asset against inflation and currency depreciation.
Currently priced around $94,000, Bitcoin might find unexpected support in the midst of these economic difficulties. Its evolving role as a potential strategic reserve for states like Arizona could further solidify its perceived value in uncertain times.
In essence, the recession that alarmed many may also serve as a catalyst for reinforcing Bitcoin’s position within the financial landscape. Dragosch’s outlook hints at a surprising resilience in the crypto market, where Bitcoin is increasingly viewed as more than just a speculative asset, but a critical alternative in an unstable economic environment.
