Bitcoin and various altcoins may face challenges as major Wall Street figures express concerns about market conditions.
On February 8, the price of Bitcoin (BTC) remained stable, reaching an intraday peak of $79,300, as investors took advantage of the dip. Other altcoins also saw gains that day, with Ethereum (ETH), Ripple (XRP), and Binance Coin (BNB) all increasing by over 3%. Notable performers included JasmyCoin (JASMY), Core (CORE), and Zcash (ZEC), which surged by more than 18%.
The stock market was similarly positive, with futures linked to the Dow Jones, S&P 500, and Nasdaq 100 climbing nearly 2%. This uptick followed a more conciliatory approach from Donald Trump regarding tariffs, as he agreed to discussions with countries like Japan and Vietnam.
Concerns from Wall Street about recession and US stocks
Nonetheless, analysts from Wall Street continue to express caution regarding the Liberation Day tariffs, which some consider a potential black swan event capable of inflicting greater harm on the economy.
On Monday, Goldman Sachs elevated its recession prediction to 45%. In a separate commentary on Tuesday, the bank adjusted its outlook on US equities from “overweight” to “neutral.” Another group of Goldman analysts cautioned that the US equity market might be entering an extended bear phase.
Furthermore, Larry Fink from BlackRock noted that numerous executives he has consulted with are increasingly anxious about a potential recession. His opinion carries significant weight, given BlackRock’s position as the world’s largest asset manager overseeing $11 trillion in assets.
Other institutions on Wall Street have echoed these sentiments. Citigroup recently downgraded US stocks and urged investors to consider shifting their focus to markets in Asia.
These predictions are particularly relevant for cryptocurrency markets due to the strong correlation between Bitcoin, altcoins such as ETH and XRP, and other risk assets. Historically, these asset classes have shown a tendency to move together.
A glimmer of hope for Bitcoin and altcoins
On a brighter note, Bitcoin and altcoins could gain if the US slips into a recession and stock prices tumble. In such a scenario, the Federal Reserve would likely have to intervene.
Pressure is already building on the Fed from the market and the Trump administration to take action before conditions deteriorate further. Trump has pointed to weakness in the bond market and declining oil prices as justifications for a proactive rate cut.
Additionally, the derivatives market now indicates a 44% likelihood of a Fed rate cut during its May meeting, up from just 10% a week prior. Goldman Sachs has also forecasted that the Fed will implement three rate cuts in the latter half of the year.
A more dovish Federal Reserve could serve as a catalyst for riskier assets like Bitcoin, altcoins, and the stock market. A historical comparison can be drawn to the COVID-19 pandemic when the Fed reduced rates to zero and introduced quantitative easing measures.