Fueled by the Russian invasion of the Ukraine and rising global inflation, most economists are convinced that a recession is imminent in the next few quarters. Past recessions have been characterized by falling stock markets and high sell-offs. With the crypto market registering high volatility, a recession could send prices into a tailspin, perhaps similar to Black Thursday 2020 or worse.

Without a recession, leading economists have indicated that the world economy will slow down this year. According to Kristalina Georgieva, managing director of the IMF, the United States, a country that controls about 25 percent of global economic activities, can engineer a soft landing through quantitative monetary policies to avoid a recession.

“The US economy is also going to slow down this year. But at least based on the data we have today, we think the United States could make it through the year narrowly avoiding a recession,” Georgieva said in an interview on CBS’s “60 Minutes.”

Bitcoin and Crypto under recession in 2023

The Bitcoin market gained roughly 40 percent in January and saw strong short-term miner and holder sell-offs. However, slow economic growth and mega unresolved cases like FTX could push Bitcoin prices further lower.

Bloomberg Intelligence senior macro strategist Mike McGlone believes the crypto market may be facing its first real downturn.

“The last significant US economic contraction, the financial crisis, led to the birth of #Bitcoin, and the potential economic reset ahead may mark similar milestones,” McGlone noted.

With a high correlation between cryptocurrencies and major indices around the world, including the Nasdaq, Dow, and S&P 500, analysts warn that their demise will affect the former. Furthermore, the inflow of crypto cash to DeFi platforms is heavily controlled by institutional investors ranked in major equity indices.

This post Bitcoin prices are set to crash and volatility to spike in the 2023 recession

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