Sign Up on MEXCJanet Yellen, Elon Musk Warns Severe Recession, Will Crypto Crash Again?
U.S. Treasury Secretary Janet Yellen and business magnate Elon Musk warn the U.S. economy is at risk of a severe recession. Despite recent inflation and jobs data indicating less probability of a recession, Janet Yellen believes high interest rates put recession at increased risk. Meanwhile, Elon Musk asserts severe recession could exist for many months and cause companies to do huge cost-cutting.
Janet Yellen and Elon Musk Warn Recession in 2023?
Treasury Secretary Janet Yellen in an interview on January 27 said the risk of a recession still persists despite better inflation and jobs data, reported Bloomberg. She believes the Federal Reserve will continue raising interest rates and high interest rates increase recession fears.
U.S. Q4 GDP report also comes in at 2.9% against the expected 2.6% indicating a decline a recession fears and cooling inflation. However, consumer and business spending dropped in December due to higher interest rates that impact purchasing power.
“I’m reasonably satisfied by the data that I’ve seen so far, but I don’t want to minimize the risk of recession, given the Federal Reserve is slowing down the economy.”
She believes maintaining a strong labor market while bringing inflation down indicates a slowdown in economic growth.
Meanwhile, Elon Musk has continuously warned the Federal Reserve of the increasing risks of recession with its hawkish rate hike approach. The Fed announces a 50 bps rate hike in the last FOMC meeting, after four consecutive 75 bps rate hikes.
Musk plans to reduce costs on everything related to Tesla to deal with a recession despite a strong Q4 earnings report. He believes companies will continue to layoffs and cost-cutting due to high interest rates.
Moreover, JPMorgan CEO Jamie Dimon expects interest rates to go beyond 5% as inflation remains high. According to CME FedWatch Tool, the probability of a 25 bps rate hike is 98.4%.
Impact on Crypto Market
The crypto market risks falling during a recession. The recent layoffs by crypto companies have impacted investor confidence. Despite the rising adoption of cryptos like Bitcoin and Ethereum (ETH), these coins remain the most volatile and traders will anticipate more downfall in crypto prices.
Bitcoin price is trading near $23,000 and Ethereum price trades at $1,592. Both major cryptocurrencies are trading sideways ahead of the Fed rate hike decision on February 1.
Also Read: Prosecutors Accuse Sam Bankman-Fried Of Witness Tampering, Seek Stricter Ban
- Grayscale’s XRP, SOL, ADA Fund To Begin Trading Tomorrow Following SEC’s Greenlight
- Donald Trump Petitions Supreme Court To Remove Fed Governor Lisa Cook
- Pi Coin Rises As Pi Network Implements Protocol v23 on Testnet
- Tether-Backed Plasma Stablecoin Blockchain Set to Launch on September 25
- Cathie Wood’s Ark Invest Backs Nasdaq-Listed Solmate To Launch $300M Solana Treasury
- Cardano Price Stays Above Ichimoku Cloud as Grayscale ADA ETF Approval Nears
- HBAR Price Prediction as SEC Approves Generic ETF Framework – Analyst Targets $1.80
- Toshi Coin Gains 57% in One Day: What’s Driving the Sudden Upside?
- Shiba Inu Price Set to Soar as Exchange Reserves Dive Amid SHIB ETF Chatter
- Pepe Coin Price Prediction as Whale Moves $25M From Robinhood- Is a Breakout to $0.00002 Next?
- XRP Price Prediction as Market Longs Hit 78% amid VivoPower Treasury Expansion Launch — Is $4 Next?
Why Trust CoinGape
CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
