The post What Will Happen to the Crypto Market If Recession Occurs? appeared on BitcoinEthereumNews.com.

With the U.S. economy showing signs of a possible recession, the crypto market initially took a hit. But there’s more to the story. While stocks and Bitcoin both dropped, experts believe Bitcoin could bounce back stronger if the U.S. dollar weakens. In the past, when the Federal Reserve cut interest rates, Bitcoin saw huge gains. Could history repeat itself? Dive into our analysis to find out how a recession might impact the future of cryptocurrencies. On the day the poor economic reports were published, both the stock market and crypto market experienced sharp declines. Bitcoin, for instance, saw its price dip from $65,400 to $62,350. This immediate response is not surprising, as investors typically react to economic uncertainty by pulling back from risk assets, which include cryptocurrencies. Economic Indicators and Market Sentiment Several key economic indicators have been pointing towards a potential recession: Rising Unemployment: The Bureau of Labor Statistics reported that the unemployment rate rose to 4.3% in July, up from 4.1% in June. This increase in unemployment is a concerning sign of economic weakness. Disappointing Job Growth: Non-farm payroll employment rose by only 114,000 jobs, falling significantly short of the 175,000 new jobs expected by economists. Such underperformance in job creation adds to the recessionary fears. Stock Market Decline: The tech-heavy Nasdaq fell nearly 2.5%, with the S&P 500 and Dow each down almost 2%. Recessions typically lead to reduced income for businesses, negatively impacting stock prices. Bitcoin’s Potential Decoupling from Equities   Despite the initial sell-off, some analysts believe that Bitcoin could eventually decouple from the broader stock market during a recession. Will Clemente, co-founder of Reflexivity Research, argues that Bitcoin’s price is “purely tied to liquidity” rather than earnings, making it potentially less susceptible to the same pressures that affect stocks. James Butterfill, Head of Research…

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Filed under: News - @ August 3, 2024 2:28 pm