Can Increased Odds of a Recession Cause Crypto to Rise? Blockchain News, Opinion, TV and Jobs

Marcus Sotiriou, Analyst At a Listed Digital Asset Broker global block (TSXV:BLOK).

After a tough week for US stock markets, the S&P 500 hit its highest level since July, rising 2.59%. S&P 500 futures also he is up more than 1.8%. This sent Bitcoin up more than 4% overnight. This stock market rally was the result of weak manufacturing data that came in yesterday. His US manufacturing ISM for September was below expectations of 52, down 1.9 points to 50.9. Additionally, employment and new orders fell below 50. Payment prices fell 1.9 points to 50.9, positive for global markets including Bitcoin yesterday as these indicators, along with lower supplier deliveries and order backlogs, point to easing inflationary pressures generated sentiment.

However, this raises concerns that the Federal Reserve may tighten too much. A renowned investor and one of Wall Street’s most respected minds, Stan Druckenmillersaid last week, “If there’s no recession in 2023, I’ll be dumbfounded. I don’t know the timing, but I’m sure by the end of 2023. I wouldn’t be surprised if it’s not bigger than the so-called average garden variety.” I’m not ruling out something really bad.” The United Nations is urging the Federal Reserve and other central banks to stop rate hikes as extreme tightening threatens to trigger a global recession.

Based on the past two major equity market drawdowns, as indicated by the above economists, we would expect a further decline in the equity market if a recession were to occur. The dot-com bubble and the Great Recession took months to bottom out and years for the market to recover. But the fact that the US stock market rose yesterday on weak manufacturing data shows that the market now fears sustained high inflation over the danger of a recession. This means that if we see similar data this month on slowing inflation, we could see a broader bailout rally in the coming months.