How much of Bitcoin’s 2025 momentum is being driven by fundamentals, and how much by macro systems that no longer offer reliable direction?
Fragile growth amid policy tightropes
The global economy in 2025 is walking a tightrope. The deliberate reengineering of trade rules by the U.S. has created a new layer of uncertainty, making global markets more volatile and less predictable.
Under President Trump, Washington’s sweeping tariff hikes have effectively rewritten the post-globalization playbook. These changes have reignited fears of a potential recession, pushing central banks, corporations, and policymakers into a state of constant recalibration.
According to Goldman Sachs, the effective U.S. tariff rate is expected to jump by roughly 16 percentage points this year alone. While this may sound like a technical tweak, the real-world consequences are already unfolding.
Goldman now expects U.S. GDP growth to slow dramatically, revising its forecast down to 0.5% for 2025. The odds of a recession over the next twelve months have surged to 45%.
Meanwhile, unemployment is projected to climb to 4.7%, while core PCE inflation could rise to 3.5%. That combination of slowing growth and persistent inflation leaves little room for error in policymaking.
To cushion the impact, the Federal Reserve is expected to deliver three rate cuts, described by analysts as “insurance cuts.” Yet, the Fed must ease labor market pressures without reigniting inflation, a task that becomes even harder when the global economic environment is this fragile.
Japan is already feeling the spillover. As an export-heavy economy, it is particularly exposed to disruptions in global trade. Slower external demand and increasingly cautious corporate investment have dragged down Japan’s growth prospects.
Forecasts now put its GDP expansion at just 1.0% in 2025 and 0.7% in 2026. The Bank of Japan, which had been preparing to raise interest rates, may be forced to delay those plans if a U.S.-led recession begins to unfold.
Europe is in a similar state of recalibration. Goldman Sachs has cut its Euro area growth outlook to 0.7%, while also reducing expectations for both inflation and the European Central Bank’s terminal rate.
The United Kingdom, too, faces a dampened economic outlook, driven by weaker global demand and continued financial tightening.
In emerging markets, the narrative echoes across regions. China’s growth forecast has been reduced to 4.0% for 2025. Even more striking is the expectation that inflation could turn negative. While further rate cuts are anticipated, these may do little to counteract the broader drag from tariffs and falling commodity prices.
Other developing economies, particularly in Latin America, Central Europe, and parts of Asia, are scaling back their projections as well. For many of them, tighter financial conditions and shrinking global demand have become defining obstacles.
As Nobel laureate Paul Krugman noted, It’s not the size of the policy shift, but the uncertainty around it that could cause a recession. And at this point, policy reversals may actually worsen the situation because they would enhance uncertainty.
So what does all of this mean for capital markets, investment strategies, and the crypto sector heading deeper into 2025? Let’s explore.
Follow for more updates @TradeTerra
