Like Springtime in New York City, the encryption market was heated, all at the same time, in early May. After weeks of navigating in the choppy seas, partly influenced by the anxieties that surround the commercial front of the administration, a palpable change in the feeling promoted the sphere of cryptography to a remarkable rally.
Bitcoin changed in the form of a tantrum tariff to a specific hunter of maximums of all time. This bullish resurgence was not isolated. Ether, having supported a significant reduction of more than 50% since the beginning of the year, organized an impressive rebound, winning 36% in the five days after the long -awaited sicking update.
The broader blockchain market reflected this enthusiasm. The Coendesk 20 index, the reference point for the performance of the main digital assets, added almost 18% in the last week, which takes its return of 30 days to more than 33%. Below in the capitalization spectrum, the Coindesk 80 index, which tracks the assets beyond the main 20, also strongly recovered from its minimums, delivering 37% during the past month. Truly demonstrating epic The amplitude of participation, the Memecoin Coindesk index of 50 Constituents added 55% in the week and an enormous 86% in the last month.
Given the mainly limited (zero) direct impact of the news of the rate and trade on the intrinsic value of most (all) cryptographic assets, this highest lamp is felt like what they call a “change of feeling.” With the Consensus of Coindesk that takes place this week in Toronto, the moment could not be more timely. The vibrations are good.
Coendesk 20, Coindesk 80, Coindesk Memecoin Index, Bitcoin and Ether from the day of liberation, April 2, 2025
Source: Coendesk indices
The spectrum of the recession
This recent market exuberance, both within digital assets and in traditional risk assets classes, has not stifled the underlying concerns of those who believe that the United States is gradually moving towards a recession. Official recessions, as declared by the National Office of Economic Research (NBER), are in fact relatively rare. However, the unusual confluence of today’s macroeconomic factors provides fertile land for caution.
Namely, the initial estimate for the first quarter of 2025 GDP showed a contraction of 0.3% at an annualized rate, a notable reversal of the growth of 2.4% in the previous quarter. It is true that this figure was biased down due to an increase in imports as companies rushed to overcome the increases in early rates, however, a contraction in GDP is a worried data point. Adding to this concern is sinking consumer’s confidence. The Conference Board Confidence Trust Index fell sharply to 86.0, its lowest level in almost five years, with the index of expectations reaching its lowest point since October 2011, a level often associated with recreational signals. The index of consumption feelings of the University of Michigan echoed this weakness, falling to 52.2 in its preliminary reading of May, driven by concerns about commercial policy and the possible resurgence of inflation. In addition, his survey highlighted an increase in inflation expectations of the entire year to 6.5%, the highest since 1981.
The growing burden of US debt and the persistent inability of the administration to tame the 10 -year treasure performance, despite the apparent efforts, also contribute to the sense of economic fragility. Finally, the potential for collateral damage by current or increasing commercial wars, including companies that potentially reduce their workforce in response to the interrupted supply chains and the increase in costs, adds another layer of concern.
Nber graph of the unemployment levels of the United States and recession periods since 1978
Source: Nber.org (Hi, Nber, should you read “Since 1978?”)
To be clear, the predominant feeling between our network still relies on an imminent recession, and we do not make predictions. However, ruling out the possibility of a recession in the current environment seems reckless.
Bitcoin vs. Other digital assets in a recession
Crypto has only experienced a Nber-Declared recession, during the worst of Covid. Although the market crisis caused a liquidity panic and a significant reduction, the posterior ocean of $ 5 billion emergency fiscal stimulus (and millions of people who discovered cryptography) pointed out things to the north and delivered bubble 2021. We may not wait for the same path in a future recession. So what could we expect?
On the one hand, there is a convincing argument that Bitcoin has now reached a level of adoption and has established a sufficient user base to begin fulfilling its long -awaited destination as a safe shelter asset in times of economic agitation. With the US dollar potentially facing pressure amid high inflation and a fan of swollen debt, the inherent shortage of Bitcoin and decentralized (and apolitical) nature are increasingly attractive.
On the other hand, traditional recessive environments are generally characterized by poor liquidity, greater risk aversion, a dominant approach to capital preservation and a decreased appetite to explore classes of nascent and volatile assets. A contraction in general economic activity would also lead to lower financing for entrepreneurial companies and even established within the Blockchain space. Finally, retail users, feeling the financial pinch of a recession, would probably have less “experimental money” to assign decentralized finances (defi) and other novel cryptographic applications.
Therefore, even if Bitcoin manages to attract safe refuge flows, other blockchain assets, particularly those that promise future growth and innovation, could face winds against significant and continuous price pressure. In our opinion, one of the least The constructive results for the broader digital assets ecosystem would be an additional increase in Bitcoin’s domain at the expense of innovation and growth in other areas.
Trade resistance
What could provide a degree of resilience for the class of digital assets and the industry as a whole is its energy for trade. Crypto works more as a class of commercial assets than one predominantly driven by investment. In favorable and unfavorable economic conditions, commercial volumes within cryptographic markets have generally remained robust and resistant. It is conceivable that the active commercial community can maintain the kind of assets until the broader economic conditions improve.
Navigate uncertainty
While a recession in the United States is a scenario that few want and one that remains outside the results of greater probability in most forecasts, and despite the recent change of feeling, its possibility cannot be completely ruled out. And, as a matter of economic cycles, contraction periods are not completely avoidable. For the sake of our flourishing industry and the progress made in the integration of digital assets in the fabric of global financial services, through trade, investment, loans, savings and generation of performance, we sincerely expect that even a modest support of support continues to boost technological development, investors education, accessibility and the wider adoption. Perhaps this will be fed by one of Crypto’s original notions: that the traditional economic system has hesitated.
