Bitcoin (BTC) Attempts a Bullish Extension
Bitcoin (BTC) attempts a bullish extension as it surges to $96k from its daily low of $92k. According to our market data, the asset has surged by 2% in the last 24 hours and by 3% in the last seven days. Supporting this move, Bitcoin’s 24-hour trading volume has also surged by 18%, with $31 billion changing hands.
US Economy Struggles
Amidst the backdrop of this, the US economy is facing serious struggles, positioning Bitcoin as a better inflationary hedge, as previously mentioned in our report. Delving into the latest macroeconomic data, we analyzed the comments by financial media platform, The Kobeissi Letter, hinting that the US economy could take a hit. According to its analysis, the nightmare of the Federal Reserve just got worse as the US Gross Domestic Product (GDP), which was estimated to record a growth of 0.3%, instead declined by 0.3% in the first quarter of the year. To fully understand the status of the current economy, Kobeissi highlighted that the GDP has recorded a negative reading for the first time since the second quarter of 2022 (Q2 2022).
Treasury Yields and Stagflation
Apart from this, Kobeissi noted that the Treasury Yields keep surging in the shrinking economy, raising an eyebrow. According to the post, this implies that “the market knows stagflation has arrived”, with the Fed facing a lose-lose situation. Based on our research, stagflation refers to an economic situation marked by stagnant growth, high inflation, and high unemployment. Thinking this was the worst the economy could ever reach, the Personal Consumption Expenditures (PCE) price index, which measures the overall average change in prices of goods and services, increased by 3.7% in Q1 2025. The previous release was 2.6%. Fascinatingly, the current data is the highest since July 2024. The ADP Employment data also shows that only 62,000 jobs were added in April, representing the lowest since July 2024.
Recession Looming, Bitcoin to Take Advantage
Kobeissi believes that the US authorities currently face a tricky scenario. Not cutting the interest rate would further weaken the GDP and increase unemployment, while reducing the rate would immediately cause another level of inflation. In April, Consumer confidence was reported to have decreased from 86, marking its lowest point since May 2020.
Source: The Kobeissi Letter
With these into play, the US economy could plunge into recession if the situation is not immediately addressed, as detailed in our previous news article.
Base Case Scenario: Recession in the US
A recession in the US has become our base case scenario. 1-year recession odds priced by the S&P 500 earnings yield and the BBB-rated corporate bond spread are surging. An economic slowdown is here. Joining this discussion, crypto trader Michaël van de Poppe highlighted that the rumours of recession should force the Fed to soften its stance. Meanwhile, Bitcoin also stands to benefit from any possible crash. As discussed earlier, analyst Sam Mow believes that Bitcoin could leverage these to drive institutional demand, positioning its price at $1 million this year.