As the US economy teeters on the brink of recession, cryptocurrency markets are experiencing a rollercoaster ride of volatility. With prominent financial figures warning of an impending economic downturn and easing tariff concerns sparking a mixed reaction, traders are left to navigate the uncertain landscape.
Crypto Markets React to US Recession Fears Amid Easing Tariff Concerns
Dogecoin fell 3% in the past 24 hours, while Bitcoin (BTC) remained stable around $85,000 as traders weigh the impact of easing tariff concerns against fears of a potential US recession. ‘Prominent financial figures warn that the US is heading into an imminent recession, with betting markets placing 40% to 60% odds.’
A US economic downturn occurs when the country's economy experiences a decline in output, income, or employment.
Causes include overspending, trade deficits, and monetary policy mistakes.
Effects can be severe, including increased unemployment, reduced consumer spending, and decreased business investments.
According to the National Bureau of Economic Research, the last major recession occurred in 2020, with GDP declining by 3.4%.
The US government responded with stimulus packages and interest rate cuts to mitigate the effects.
Rising Recession Fears Amid Easing Tariff Concerns
Augustine Fan, head of insights at SignalPlus, told CoinDesk that prominent financial figures have warned of a potential US recession by 2025. ‘Betting markets place 40% to 60% odds on this happening in the next year.’ However, Fan believes that sentiment often frames reality, not the other way around.
Fan also noted that crypto has benefited from recent market volatility, with equities experiencing higher risk-off moves than Bitcoin. The recent tariff-driven sell-off has pushed spot gold to all-time highs, allowing Bitcoin to regain some of its ‘store of value’ narrative.
Crypto Majors React to Recession Fears
Crypto majors tracked by the CoinDesk 20 slid nearly 2% in the past 24 hours, with DOGE leading losses. Solana’s SOL, tron (TRX), and Cardano’s ADA lost as much as 2.5%, while BNB Chain’s BNB and xrp (XRP) were little changed.
Mantra’s OM token surged 20% after a dramatic sell-off, with its CEO stating that a recovery plan is in the works. However, market watchers remain skeptical of any promises. ‘Story Protocol’s IP dumped 20%, then jumped more than 30% within hours late Monday, with early fears of an OM-like sell-off among crypto circles.’
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