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Amid fears of an incoming financial recession, a section of analysts predict a key turnaround in the crypto market. Currently the cryptocurrency market is largely correlated with the stock market but possibility of an economic downturn could mean advantage crypto. In this context, a United Nations agency had on Monday warned several central banks, including The Fed, over recession risks. Meanwhile, the cryptocurrency prices have in the last few weeks remained largely stagnant around existing price ranges.
Advantage Crypto If Recession Worsens?
Central banks are risking chances of recession followed by prolonged stagnation if they keep raising interest rates, said the agency. According to a Wall Street Journal report, the agency said the Fed risks causing significant harm to developing countries if it persists with rapid rate rises. The United Nations Conference on Trade and Development (UNCTAD) said that a percentage point rise in the Fed’s interest rate significantly lowers economic output in other rich countries. UNCTAD secretary-general Rebeca Grynspan said there is still room for avoiding the recession.
“There’s still time to step back from the edge of recession. We have the tools to calm inflation and support all vulnerable groups. But the current course of action is hurting the most vulnerable, especially in developing countries and risks tipping the world into a global recession.”
What Would A Recession Mean For Crypto Market?
In this context, there is a divided opinion on how cryptocurrencies would fare in a recession environment. While a majority of the community thinks crypto assets would sink if stock market falls, there is an increasing argument of a contrarian view. American investor Stan Druckenmiller, who is confident of a recession in 2023, feels it would favor crypto market. He said that cryptocurrencies could benefit if distrust in central banks swells. Similarly, experts feel Bitcoin will likely deviate and forge its own path, thanks to its decentralized nature.
While there were several headwinds in the macroeconomic scene recently, Bitcoin (BTC) price remained largely at same level in last 30 days. A majority of days over the last one month saw BTC trading below $19,700 level. As of writing, the cryptocurrency is trading at $19,450, up 1.31% in the last 24 hours, according to CoinMarketCap.
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