Bitcoin Tank if a recession hits, does the IMF issue a warning?

The crypto market has been showing signs of decline recently as the prices of Bitcoin and other crypto assets continue to fall. With increases in interest rates by most of the world’s central banks, the world economy is tightening up. The impact on both the crypto market and the traditional market is significantly devastating.

After the events, the International Monetary Fund (IMF) warned of economic decline. Furthermore, it speaks of a possible worse global recession in 2023. This means that the financial markets will move away from risk, creating extreme fear for the markets.

Therefore, there could be a drastic drop in the prices of crypto assets and conventional stocks.

Does the price of BTC correlate with stocks?

Bitcoin price has shown a strong correlation with equity assets for over a year. This is seen with most BTC trends and some stocks in most cases. Several factors and conditions have been highlighted as explanations for the correlation. One of the stocks with a strong link to Bitcoin is the S&P 500.

Bitcoin witnessed a price crash during the global pandemic recession in 2020. This was the same story for stocks. But as economic conditions progressed positively, the system transitioned accordingly. As a result, the cryptocurrency and stock markets were sold off in December 2021 and May 2022.

Most of the correlated trends could indicate the performance of stock markets once they reach a certain threshold of liquidity. But, on the contrary, it could suggest that the institutional fund has reached a considerable portion of the capital inflows.

The price of Bitcoin could move strongly and ferociously despite the causal factors of a declining economy. However, the main crypto asset could take a drastic drop once there is a global recession. This will prompt investors to withdraw their funds through massive sales.

BTC could offer a long-term bullish overview

The price of Bitcoin will rise in a situation with a favorable intervention. For example, the US Federal Reserve and other central banks globally could take warnings from the IMF and cut rates to stem the recession. Such a situation will create a price rally for Bitcoin and other crypto assets. Also, equity stocks will put in a positive effort.

However, there might still be hope even without central bank intervention. This means that a recession will arise and bring down the crypto market, with the price of BTC falling. These lower prices could become an attractive entry point for some crypto investors.

Remember that the recession of 2008 did not give Bitcoin the limelight. But after its crash in March 2020, the leading cryptocurrency had a massive bull market that increased its dominance in the cryptocurrency market. Thereafter, Bitcoin rallied well above equities and has maintained its stance.

With the general evolution of events, Bitcoin shows a long-term bullish outlook. At press time, the BTC price is hovering around $19,137, indicating a drop in the past 24 hours.

Bitcoin Rises Above $19,000 l BTCUSDT on Tradingview.com
Featured image from Pixabay and charts from TradingView.com

Leave a Comment