Bitcoin’s recovery is jeopardised by recession fears, yet tariff negotiations between the US and China could ease some uncertainties. Analysts from Apollo Global Management predict a potential recession, while others see Bitcoin possibly rebounding as a hedge against inflation. Industry experts urge caution, noting increased correlation with tech stocks amidst economic stagnation concerns.
Bitcoin’s journey towards reclaiming its all-time high faces turbulence amid growing recession worries, analysts suggest. Experts from Apollo Global Management foresee an economic downturn possibly arriving by summer, pointing to a sharp decline in earnings outlooks reminiscent of 2020. As cross-asset analyst Samantha LaDuc highlighted on X, concern is palpable.
Crucial to Bitcoin’s price movements seems to be the upcoming tariff negotiations between the US and China, according to research analyst Aurelie Barthere from Nansen. She notes that as May progresses, Chinese shipments will reach US ports, coinciding with the expiration of some tariff exemptions on certain categories like auto parts. Barthere warns that a failure to make progress could not only prompt a recession but potentially lead to significant losses for Bitcoin.
That said, Barthere is optimistic overall. She believes a breakdown in negotiations is not likely since both nations recognise the stakes of their trade relationship. “The expectation is for the US to strike necessary deals or at least reach agreements that could stabilise tariffs at a 10% mark,” she commented.
Recent reports indicate that the US has actively sought a dialogue with China regarding tariffs. This development, cited by unnamed sources in a report on May 1, points towards potential easing of trade tensions, thereby possibly paving a path for Bitcoin to recover its value toward previous highs.
Despite looming recession fears, Bitcoin might surprise analysts with resilience. Anndy Lian, a blockchain adviser and author, commented that Bitcoin could initially experience volatility, as it often moves in sync with risk assets like stocks. Historical patterns, particularly after the 2020 recession, seen as Bitcoin rebounding while serving as a hedge against inflation, should not be overlooked.
In times of stagflation, where inflation is high but growth stagnates, Bitcoin often presents as an attractive investment, drawing parallels to gold’s role as a safe haven. However, Lian also noted that Bitcoin’s increasing correlation with tech stocks adds a layer of uncertainty. After the COVID-19 panic in March 2020, Bitcoin surged dramatically, showcasing its potential for recovery when supportive economic measures are in place.
Yet caution is advised, as other industry analysts are not so bullish. Marcin Kazmierczak, COO of blockchain oracle firm RedStone, expressed that if the recession predictions come to fruition, the crypto market might plummet alongside stocks. He cites economic struggles from prior tariff dealings and trucking issues as points of concern that could adversely affect speculative assets like cryptocurrencies.
Overall, as the month unfolds and talks between the US and China progress, the outlook for Bitcoin and the broader crypto market will heavily depend on trade dynamics and macroeconomic factors. Investors remain watchful, weighing the implications of policy changes on market trajectories.
