In the latest episode of Macro Markets, hosted by crypto analyst Marcel Pechman on the Cointelegraph Markets & Research YouTube channel, the potential impact of an impending economic recession on Bitcoin’s price is discussed. Pechman, who has a talent for explaining complex financial concepts in simple terms, sheds light on the cause and effect of traditional financial events on the day-to-day crypto activity.
According to the International Monetary Fund (IMF) and the United States Federal Reserve, an economic recession is on the horizon. Pechman highlights the fact that the U.S.’s record-low unemployment rate could be masking a bigger issue caused by inflation. He explains that the S&P 500 is only 13% below its all-time high, which is being driven by investors moving away from fixed income. Inflation is no longer a primary concern, which is why investors are looking for alternative investment opportunities.
Pechman goes on to discuss the link between the banking crisis, a weaker U.S. dollar, and Bitcoin’s recent rally above $30,000. He explains that Bitcoin is seen as a hedge against inflation and a store of value, which is why investors are flocking to it during times of economic uncertainty. As the value of traditional currencies decreases, the value of Bitcoin increases.
The next segment of Macro Markets focuses on the bank’s leverage ratio. There is growing concern that financial institutions are lacking the capital to cover their risks, but Pechman argues that the most recent data does not support this claim. The real issue, in his view, is unrealized losses. Banks are holding debt instruments that are paying way below their cost of capital, which is putting pressure on their balance sheets.
If you are looking for exclusive and valuable content provided by leading crypto analysts and experts, make sure to subscribe to the Cointelegraph Markets & Research YouTube channel. Macro Markets airs every Friday and provides insights into the latest trends and developments in the world of crypto. With the looming threat of an economic recession, it’s more important than ever to stay informed about the impact on the crypto market.