Will Bitcoin Tank If A Recession Hits, IMF Issues Warning

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The crypto market has been showing signs of decline lately as the prices of Bitcoin and other crypto assets continue to fall. With the interest rate hikes of most global central banks, the global economy is tightening. The impact on both the crypto and traditional markets is significantly devastating.

Following the events, the International Monetary Fund (IMF) warned of an economic downturn. It also speaks of a potentially worse global recession in 2023. This means that financial markets will be at risk and create extreme fear for the markets.

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

BTC price correlates with stocks?

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

Bitcoin witnessed a price drop during the global pandemic recession in 2020. This was the same story for stocks. But as economic conditions gradually evolved positively, the system changed accordingly. As a result, the crypto and stock markets sold out in December 2021 and May 2022.

Most of the correlated trends can indicate the performance of securities markets once they have reached a certain liquidity threshold. But conversely, it could indicate that institutional funds have achieved a significant portion of capital inflows.

The price of Bitcoin can be rocked back and forth firmly and fiercely, despite the causative factors of a declining economy. However, the primary crypto asset can experience a drastic drop once there is a global recession. This will prompt investors to withdraw their funds through massive sell-offs.

BTC could offer a long-term bullish overview

The price of Bitcoin will rise in a favorable intervention situation. For example, the US Federal Reserve and other central banks worldwide would IMF Alerts and cut rates to contain the recession. Such a situation will create a price rally for Bitcoin and other crypto assets. Equity stocks will also aim positively.

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

Recall that the recession of 2008 did not bring any prominence to Bitcoin. But after the collapse in March 2020, the primary cryptocurrency suffered a massive bull market that increased its dominance in the crypto market. From then on, Bitcoin soared far above the stock and maintained its stance.

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

Will Bitcoin Tank When Recession Hits, IMF Warning?
Bitcoin rises above $19,000 l BTCUSDT on Tradingview.com
Featured image from Pixabay and charts from TradingView.com

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