One of the most respected economists in the United States is sounding the alarm about an impending recession, as consumer confidence plunges and the trade deficit jumps. This article explores the potential impact of the recession warning on Bitcoin and leading altcoins like Chainlink (LINK), Cardano (ADA), and Solana (SOL).
Economist Warns a Recession is Coming Unless One Thing Happens
Mark Zandi, the top economist at Moody’s, a top ratings agency, warned that the US may sink into a recession this year.
He said this after a report by the Conference Board showed that consumer confidence tumbled to 86 in April. That figure was a 19.3 percent decline in the last three months.
Zandi has consistently argued that a 20-point drop in consumer confidence over three months could lead the US into a recession. As such, he still sees hope that the country will avoid a recession if trade disagreements are resolved.
Signs of potential deals with top countries, especially China, will help to boost confidence in May and reduce those recession risks.
His statement came as analysts at top US banks predicted that the GDP data coming up on Thursday will show that the economy contracted in Q1. That is after a report showed that the US trade deficit expanded to a record $162 billion in March as companies rushed to buy products ahead of the US tariffs.
Read more: Is Pi Network the Next Bitcoin, Ethereum, and XRP? Expert Weighs In
Why a Recession is Good News for Chainlink, Cardano, and Solana Prices
In theory, a recession should be a bad thing for stocks and other risky assets like Chainlink, Solana, Cardano, and other assets. That is because any mention of a recession brings memories of events like the dot-com bubble, the Global Financial Crisis, and the Covid-19 pandemic.
In reality, however, a recession is simply a period when the US economy contracts for two consecutive quarters. In most cases, financial assets like stocks and cryptocurrencies do well when this happens. A broader market crash happens when there is a structural issue in the market, such as the banking sector in 2008/9.
A recession could benefit altcoins such as Cardano, Chainlink, and Solana by curtailing inflation through decreased demand, prompting the Federal Reserve to implement more interest rate cuts than anticipated.
Given these circumstances, many Polymarket users believe the Federal Reserve will enact two rate cuts this year, with some anticipating three or four. Cryptocurrency and stock prices do well when the Fed is cutting.
The fears of a recession, followed by Federal Reserve cuts, explain why the stock market is having the longest rebound since 2022. In a note, an analyst told Bloomberg:
“Many are still calling for a recession and even lower equity levels, but we think the notion of federal intervention supporting equities and the economy, sometimes referred to as the ‘Trump put’ and ‘Fed put,’ is real. And while tops and bottoms are hard to recognize as they are happening, we think the worst is behind us.”
Therefore, there is a likelihood that Bitcoin and top blue-chip altcoins like ADA, SOL, and LINK will continue doing well this year.
Read more: 1 Crypto to Buy, 1 Altcoin to Sell Today: Sign, IOTA
