OKX Research: Signs of US Economic Recession Reappear, Causing Changes in the Crypto Market

On April 17, Goldman Sachs released a report stating that the probability of a US economic recession in the next two years is 35%. This caused quite a stir, with both the crypto market and US stock markets experiencing certain declines.

1. High Inflation, Goldman Sachs Bearish on US Economy

The report mentions that the main challenge currently facing the US is narrowing the gap between job openings and workers, and by tightening fiscal and monetary policy, reducing job opportunities without significantly raising the unemployment rate, thereby slowing wage growth to a pace consistent with the 2% inflation target. However, the problem is that historically in the US, significant declines in the gap have only occurred during economic recessions.

In addition, earlier this month, The Wall Street Journal surveyed 65 business, academic, and financial professionals. Respondents generally expect the probability of the US economy falling into a recession in the next year to be 28%, higher than the 18% at the beginning of the year and 13% a year ago. The academic community generally believes that the risk of US recession is gradually rising.

Data from The Wall Street Journal

Data released by the US Department of Labor on April 12 shows that US CPI rose 8.5% year-on-year in March, the highest level since December 1981. This figure is higher than the Dow Jones expectation of 8.4%, meaning the US has experienced a level of price increases not seen in the past 40 years.

US Consumer Price Index (CPI) and Producer Price Index (PPI) both reach historic highs

2. Interest Rate Hikes Become a Must, Will Have Huge Impact on Crypto Market

The sword hangs high; continuing to raise interest rates seems to be the Fed's only reliable option. But clearly, Wall Street is more concerned with whether the US economy can avoid a recession.

Previously, Fed Chair Powell indicated that the Fed's May policy meeting might raise rates by 50 basis points. Hawkish representative and St. Louis Fed President Bullard went even further, boldly stating "rates will be raised to around 3.5% by the end of the year, and does not rule out the option of a single 75 basis point hike."

Regarding the "economic recession theory" proposed by investment banks represented by Goldman Sachs and the economic academic community, "Hawk King" Bullard chose to ignore it: "It's too early to talk about recession; rate hikes have only happened once." Bullard expects that with a tight monetary policy, the US economy will grow at a healthy pace above the long-term trend in 2022 and 2023, with unemployment dropping below 3%.

Pessimistic expectations for macro financial markets have exacerbated volatility in the crypto market. Recently, Bitcoin fell below the $40,000 mark again for the first time in nearly a month.

Although Russia announced the重磅 news that "natural gas and other energy will use Bitcoin for settlement," the market response suggests it merely stopped the downward trend. From Bitcoin's all-time high to repeatedly breaking below the $50,000 and $40,000 marks, there is a strong correlation with the Fed's monetary policy tightening.

As one of the world's main value assets, Bitcoin still highly depends on the stability of the US dollar and global financial stability led by US finance. It can be said that the Fed under Powell's leadership is the "person" who directly influences Bitcoin's trend.

While the possibility of a US economic recession objectively exists, judging from many similar historical cases, the Fed's tolerance for economic recession has not shown the current tough attitude, but instead chose to prioritize compromise with high inflation, delaying rate hikes or even cutting rates. In other words, there is a possibility that the Fed's May meeting will stop raising rates.

3. What's Next for Bitcoin and the Crypto Market? Two General Outcomes

So, where will Bitcoin and even the crypto market go then? Let's simulate.

Possibility 1: The Fed's May meeting will continue to raise rates by 50 basis points or more, with full-year rate hikes exceeding 3% to curb high inflation —

Bitcoin will continue to digest the "aftereffects of dollar money printing" from 2021 and earlier. Funds will continue to flow out until US CPI returns to early 2021 levels or even earlier. During this period, the US will strive to maintain the dollar's stable position and solidify the existing international financial system.

In the long term, the decoupling of the dollar and Bitcoin will become possible. Bitcoin will regain rapid appreciation after a period of downturn, and the crypto market will usher in a new period of stable development.

Possibility 2: To avoid US economic recession risk, the May meeting raises rates by less than 30 basis points, with full-year rate hikes under 2% —

Financial risk will sweep the crypto market, and Bitcoin prices will return to previous highs more quickly or even break new highs. Dollar inflation will ease but purchasing power decline cannot be avoided. The crypto market will race forward for a period in a state of high structural risk and high value coexisting.

The risk transfer from the dollar exacerbates global market instability. The dollar's dominant position could collapse overnight, at which point funds will seek new value targets, and Bitcoin's status as a mainstream asset will steadily rise.

From the simulation results, because Bitcoin's value is far from reaching its true peak, as a value asset and challenger to mainstream currencies, it still has enormous value space.

Disclaimer

This article may contain product-related content that is not applicable to your region. This article is intended only to provide general information and is not responsible for any factual errors or omissions contained therein. This article represents only the author's personal views and does not represent the views of OKX. This article is not intended to provide any of the following advice, including but not limited to: (i) investment advice or investment recommendations; (ii) offers or solicitations to buy, sell, or hold digital assets; or (iii) financial, accounting, legal, or tax advice. Holding digital assets (including stablecoins) involves high risk, may fluctuate significantly, and even become worthless. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. For questions regarding your specific situation, please consult your legal/tax/investment professional. Information appearing in this article (including market data and statistics, if any) is for general reference only. Although we have taken all reasonable precautions in preparing these data and charts, we assume no responsibility for any factual errors or omissions expressed herein. © 2025 OKX. This article may be copied or distributed in full, or excerpts of 100 words or less from this article may be used, provided such use is non-commercial. Any copying or distribution of the entire article must also prominently state: "© 2025 OKX, used with permission." Permitted excerpts must cite the article name and include attribution, such as "Article Name, [Author Name (if applicable)], © 2025 OKX". Some content may be generated or assisted by artificial intelligence (AI) tools. Derivative works or other uses of this article are not permitted.

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