Fidelity Analyst: Bitcoin Could Benefit Following Economic Recession

It seems that Bitcoin could have a lot to gain in the case of an economic recession. Check out the latest reports about the matter below.

According to Jurrien Timmer, the global macro director at Fidelity Investments, a recession could result in a significant rally for Bitcoin (BTC). Timmer states that Bitcoin’s gains are dependent on the decline of current high-interest rates.

He goes on to explain that the macro narrative needs to shift from being restrictive to accommodative to continue driving Bitcoin’s growth.

Timmer’s chart depicts a price band based on a typical adoption curve and a range of real interest rates (-2% to +2%). This range is derived from the past adoption rate of the internet and nominal interest minus inflation.

Based on Timmer’s analysis, it seems that Bitcoin’s upward trajectory may only reach $45,616 by the end of 2025. However, if interest rates drop, it could potentially hit a high of $96,210 before the same year ends.

Timmer also believes that in the event of a recession, investors may turn to Bitcoin and gold as safe haven investments, leading to a surge in their prices.

Timmer predicts that regardless of the stock market’s performance, Bitcoin may still experience significant gains in the upcoming market cycle.

“Bitcoin has become less correlated to equities, and less volatile. Its annual volatility has declined from 85 in 2021 to 55 (which is still high), and its 12-month correlation has fallen from 65% to only 7%. So Bitcoin might provide uncorrelated returns in the next market cycle.”

According to the macro expert, Bitcoin will need the Federal Reserve to inject more liquidity into the markets in order for it to reach new all-time highs.

During the Covid-19 pandemic, the Federal Reserve resorted to quantitative easing, which involves printing money, to support the economy. This led to a surge in the value of gold and Bitcoin.

If the money supply continues to grow faster than its long-term growth rate, gold’s market share is expected to increase. Therefore, Bitcoin bulls are hoping that the money printers will go to work again.