Bitcoin News – Bitcoin Investors Cautious as Credit Spreads Widen Amid Recession Fears
Bitcoin News – As concerns over a potential recession grow, BTC investors may be premature in expecting bullish momentum from the cryptocurrency in the long term, according to Markus Thielen, head of research at 10x Research. Thielen’s comments came in an April 11 markets report, where he highlighted that widening credit spreads suggest recessionary fears are deepening across the economy.
Short-Term Pressure for Bitcoin
Thielen warned that while the long-term effects of a recession could eventually be bullish for Bitcoin (BTC), driven by expected monetary easing after potential US Federal Reserve rate cuts, the digital asset could face significant headwinds in the short term. Typically, when economic indicators such as rate cuts or China’s devaluation occur, BTC has experienced initial sell-offs due to confirming economic weakness before recovering.
“The first cut might not be so impactful, and it could signal broader economic struggles,” Thielen explained. Despite this, there is a growing expectation that Bitcoin may thrive in a recessionary environment, a sentiment echoed by BlackRock’s head of digital assets, Robbie Mitchnick, who stated in March that Bitcoin would likely benefit from such macroeconomic conditions.
The Potential Impact of the US Dollar and Interest Rates
The US Dollar Index (DXY) has seen a decline of 2.92% over the last five days, sitting at 100.337 as of the latest TradingView data, signaling potential weakness in the dollar. This shift has added to market concerns, as monetary policy and the broader economic landscape continue to influence asset prices, including Bitcoin.
However, Thielen pointed out that historically, periods of widening credit spreads often lead to more downside pressure on Bitcoin before it finds a path to recovery. While the long-term outlook may be positive, short-term challenges remain, making it crucial for investors to manage expectations.
In conclusion, although Bitcoin could eventually benefit from economic shifts, it is likely to face volatility and resistance in the near term.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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