Bitcoin’s recent decline may stem more from broader economic concerns than from issues specific to the cryptocurrency market, according to André Dragosch, Bitwise’s Head of Research for Europe. In a Wednesday social media post, Dragosch suggested that Bitcoin appears to be pricing in the possibility of a severe U.S. recession. If such a downturn does not happen, he believes Bitcoin could be poised for a strong recovery.
Dragosch views Bitcoin as primarily driven by macroeconomic forces, estimating that historically about 90% of its performance can be linked to factors like growth expectations, global liquidity, and monetary policy. However, he acknowledges there are times when Bitcoin moves independently of these trends, and he thinks the market may currently be in such a phase.
Part of this recent divergence, he noted, could be due to worries beyond traditional economic indicators. Some investors point to what Dragosch calls a “quantum discount”—the idea that selling by long-term holders and speculation about future quantum-resistant cryptography are putting pressure on Bitcoin’s price. He observed that Bitcoin’s underperformance relative to Bitcoin Cash, which is seen as having a clearer near-term plan for quantum resilience, might reflect this concern. Dragosch estimates the market may be pricing in a 25% probability for quantum-related risks, while he believes a more realistic figure would be closer to 5%, given that any serious quantum threat is likely still far off.
Recently, Dragosch said Bitcoin’s sensitivity to macroeconomic news has increased again, coinciding with weakness in software stocks and adding to the downward pressure. In his view, the latest correction has created one of the largest macroeconomic mispricings in Bitcoin’s history. He pointed to a significant gap between forward-looking economic indicators and Bitcoin’s implied growth pricing, noting that this disconnect is even more pronounced now than during the COVID-19 recession in 2020.
Practically speaking, Dragosch believes Bitcoin’s current price reflects expectations of a deep U.S. recession. If a severe downturn does not materialize, he argues this could set up one of the most asymmetric risk-reward opportunities Bitcoin has seen.
He also emphasized that not all economic signals are negative. Industrial commodities are showing early signs of renewed momentum, U.S. ISM data has moved back into expansion territory, and leading indicators like Germany’s Ifo survey and Taiwanese semiconductor exports are trending upward. Additionally, global rate-cutting cycles have historically preceded a stabilization in growth expectations. Together, these factors suggest global growth may not be weakening as sharply as some fear. Such an environment, Dragosch noted, typically supports risk assets like Bitcoin while reducing relative demand for gold. He highlighted that the BTC-to-gold ratio is near levels that have historically signaled a dislocation, which he sees as another potential sign of undervaluation.
At the time of writing, Bitcoin was trading at $67,591, roughly 46% below its all-time high of $126,000 reached in October of last year.
Frequently Asked Questions
Of course Here is a list of FAQs about the topic Is Bitcoin Already Accounting for a US Recession Analyst Spots a Major RiskReward Opportunity designed to cover a range of perspectives from beginner to advanced
Beginner Concept Questions
1 What does it mean that Bitcoin is accounting for a recession
It means that some analysts believe the current price of Bitcoin already reflects investor fears of an upcoming economic recession in the US In other words the potential negative impact of a recession may already be priced in to Bitcoins value
2 How could a US recession affect Bitcoin
Its debated Traditionally in a recession risky assets like stocks can fall as investors seek safety However some argue that if the recession leads to more money printing by the Federal Reserve Bitcoin could later rise as a hedge against inflation
3 What is a riskreward opportunity in this context
The analyst suggests that if a recession is already reflected in Bitcoins price then buying at current levels could offer a high potential upside if the recession is milder than feared or if Bitcoins longterm narrative strengthens
4 Is Bitcoin a safe haven during a recession
Its not a traditional safe haven like gold or US Treasuries Bitcoin is highly volatile It is considered by many to be a riskon asset but some investors view it as a longterm hedge against currency devaluation which can be a side effect of recessionfighting policies
Intermediate Market Dynamics Questions
5 What signs would show Bitcoin is pricing in a recession
Signs include Bitcoins price falling alongside stock markets increased correlation with risky assets high volatility driven by macroeconomic news and trading behavior that mirrors investor fear
6 Could Bitcoin decouple from the stock market in a recession
Possibly If investors start to view Bitcoin primarily as digital gold or an alternative monetary system its price movement could diverge from stocks However so far it has often correlated with major tech stocks during periods of market stress
7 What does macroeconomic headwind mean for Bitcoin
It refers to largescale economic factorslike rising interest rates high inflation or