3 months ago
22 ARTICLE AD
Goldman Sachs has recently revised its outlook on the U.S. economy, reducing the likelihood of a recession in the next year from 25% to 20%. This adjustment comes after positive signs in the economy showing that the economy is performing better than expected.
Goldman Sachs has hinted that if the August jobs report, due on September 6, shows continued strength, the recession probability could drop further to 15%. As the U.S. economy shows signs of stabilization, the cryptocurrency market remains in a state of flux, raising questions about how Bitcoin might respond to these evolving macroeconomic conditions.
Fed’s Next Move: Rate Cuts on the Horizon?
Goldman Sachs economists, led by Jan Hatzius, are increasingly confident that the Federal Reserve will cut interest rates by 0.25% in September due to signs of a slowing economy. However, if the upcoming jobs report is strong, the Fed might reconsider or delay the rate cut.
For Bitcoin, the Fed’s potential rate cut presents both opportunities and risks. Lower interest rates generally weaken the dollar, which can make Bitcoin more attractive as an alternative investment. This could drive increased demand for the cryptocurrency.
Conversely, if the rate cut is seen as a response to growing fears of an impending recession, it might lead to a more cautious market environment. In such a scenario, investors might shy away from riskier assets like Bitcoin, causing its price to struggle.
Bitcoin’s Mixed Reaction to Economic Shifts
While traditional markets have reacted positively to the recent economic data, Bitcoin’s response has been muted. Over the past week, Bitcoin’s price has remained relatively flat, even as U.S. stocks, particularly the Nasdaq, saw gains of around 5%. This divergence highlights a cautious sentiment among cryptocurrency investors, who may be awaiting more definitive signals before making significant moves.
Markus Thielen, Head of Research at 10x Research, told a popular news outlet that while a rate cut could initially boost Bitcoin, it might also signal underlying economic weakness that could lead to a market correction. He pointed to Bitcoin’s performance in 2019 as a cautionary tale. That year, Bitcoin surged by 20% following the Fed’s rate cut in July, only to decline by 35% by year-end as economic concerns persisted.
Contrasting Economic Outlooks and Their Impact
Not all economists share Goldman Sachs’ optimistic outlook. JPMorgan‘s chief global economist, Bruce Kasman, remains cautious, highlighting signs of weakening labor demand and a slowdown in global manufacturing. Kasman suggests that while the service sector continues to show strength, the overall economic momentum may be waning.
JPMorgan has maintained its recession probability at 45% through the end of 2025, citing additional uncertainties related to the political landscape. Given these mixed signals, Bitcoin’s future remains unclear, and analysts recommend that investors and traders exercise increased caution.
