Donald Trump’s Tariffs Raise Odds Of US Recession & What It Means For Crypto Market

Donald Trump’s tariffs continue to hurt the global markets, and now, experts such as JPMorgan are predicting a US recession will happen this year. This development is significant considering how it could impact the crypto market, although not in the way some might expect.

Donald Trump’s Tariffs Raise Odds Of US Recession This Year

In a CNBC interview, JPMorgan’s chief economist, Bruce Kasman, revealed that they have raised the odds of a US recession to 60% following Donald Trump’s tariffs announcement earlier this week. Deutsche Bank has also raised the probability of a recession to 50%.

Meanwhile, prior to Trump’s announcement, Goldman Sachs raised the odds of a recession from 20% to 35%. Market commentator The Kobeissi Latter stated that a recession is impossible to avoid if these tariffs persist. Traders are also betting on a downturn this year. On the prediction platform Kalshi, odds for that to happen have surged to 61%.

A US recession is significant considering the impact it could have on global markets. The stock market has already entered bear market territory following Donald Trump’s announcement of tariffs on almost all countries on April 2.

As such, a recession would only cause the stock market and other markets to plunge harder. However, amid this downtrend in the global markets, the crypto market, led by Bitcoin, has shown some impressive strength.

A CoinGape market analysis noted that Bitcoin has decoupled from stocks. The flagship crypto is down only 5.51% while the S&P 500 has crashed 12% over three days. A plausible explanation is that market investors see BTC as a flight to safety amid the market downturn, which is undoubtedly bullish for the crypto market, especially if a US recession occurs.

It is worth mentioning that BlackRock CEO Larry Fink had also previously praised Bitcoin as an “uncorrelated asset” that provides a hedge against market turmoil.

A Recession Might Be Bullish For The Crypto Market

Amid talk of a US recession following Donald Trump’s tariffs announcement, Dom Kwok, an expert and co-founder of EasyA, has affirmed that recessions are bullish for crypto prices. He explained that the US Federal Reserve lowers interest rates during recessions to spur the economy.

This immediately leads to quantitative easing (QE), which is bullish for the crypto market, and more liquidity flows into the market during this period. Dom added that all this would lead to crypto and risk asset prices rising. He also alluded to how the Bitcoin price surged during the 2020 COVID recession.

As such, the crypto market is likely to soar again if a recession occurs. Analyst Kevin Capital also echoed a similar sentiment following China’s response to Donald Trump’s tariffs.

The analyst stated that the crypto market was more focused on the Fed’s monetary policies rather than tariffs. This indicates that a market boom would happen even in the face of a recession, since the US Central Bank would likely step in to help stimulate the economy.