While a potential U.S. recession may eventually trigger bullish conditions for Bitcoin (BTC), short-term downside risks remain, according to 10x Research head Markus Thielen.
In a market report published on April 11, Thielen warned that Bitcoin investors may be prematurely celebrating the long-term gains a recession might bring.
“Expecting a bullish impulse is too early,” Thielen stated, pointing to widening credit spreads that signal rising recessionary pressure within the U.S. economy.
Bitcoin Faces Short-Term Headwinds Despite Long-Term Potential
Bitcoin is currently trading at $81,252, up 2.4% in the past 24 hours, but Thielen says the digital asset could face near-term pressure.
He explained that BTC typically sells off during initial Fed rate cuts or Chinese yuan devaluations — both of which are commonly seen during early recession stages. The reasoning is twofold: early rate cuts confirm economic weakness and initial easing may not deliver significant market support.
“Normally, Bitcoin first sells off when China devalues or the Fed cuts, as the first cut might not be so impactful and also confirms economic weakness,” Thielen told Cointelegraph.
Market Indicators Reflect Caution on Rate Cuts
The core Consumer Price Index (CPI) rose 2.8% year-over-year in March — the lowest since March 2021.
White House crypto and AI adviser David Sacks called for an immediate rate cut on April 10, citing subdued inflation data.
However, CME Group’s FedWatch Tool suggests a 64.8% chance of no rate cut at the May FOMC meeting.
While investors often associate rate cuts and monetary easing with rising asset prices — particularly crypto — Thielen emphasized that Bitcoin’s recovery may lag due to macro uncertainties, according to Cointelegraph.
Widening Credit Spreads, Dollar Weakness Add Pressure
Thielen noted that widening year-over-year credit spreads have historically signaled further downside risk for Bitcoin, as markets price in slower economic growth and financial stress.
Simultaneously, the U.S. Dollar Index (DXY) has fallen to 100.337, down 2.92% over the past five days, reflecting growing concerns over dollar weakness.
“The U.S. dollar has exited the room. Once again, something is broken,” remarked macro analysis account The Kobeissi Letter in an April 10 post on X.
BlackRock Sees Long-Term Bullish Case for Bitcoin in a Recession
Despite the cautious short-term outlook, some major players see long-term tailwinds for Bitcoin in a recessionary scenario.
“A recession would be a big catalyst for Bitcoin,” said Robbie Mitchnick, BlackRock’s head of digital assets, during a late March interview. While he acknowledged the uncertainty surrounding whether a recession will materialize, Mitchnick affirmed that Bitcoin is well-positioned to benefit from such an environment.
