US Recession 'Turning Into a Tailwind' for Bitcoin: Bitwise Analyst
Bitcoin experienced a decline on Wednesday, trading around $94,000, following a contraction in the U.S. economy for the first time in three years, raising recession concerns. Despite initial bearish sentiments, some analysts suggest that a recession could ultimately benefit Bitcoin as it may lead to rate cuts and a weakening dollar. The economy contracted at an annualized rate of 0.3% in the first quarter, prompting fears that the Federal Reserve might lower interest rates to stimulate growth. Traders now anticipate a 58% chance of a rate cut by July. Lower interest rates typically favor risk assets like Bitcoin. Bitcoin has shown signs of decoupling from U.S. stocks, moving in tandem with gold, amid growing concerns over dollar-based assets. The U.S. Dollar Index rose 0.23% on Wednesday but has decreased 8.3% year-to-date, indicating potential structural depreciation of the dollar, which could position Bitcoin as a hedge against such trends.
