Goldman Sachs Cuts U.S. Recession Probability to 20% — What Does This Mean for Bitcoin?
Date: 2024-08-19 Author: Oliver Abernathy Categories: CRYPTO PAYMENTS
In an August 17 note to clients that was spotted by Bloomberg, Goldman Sachs chief economist Jan Hatzius said the probability of a recession has been cut from 25%, and could fall to 15% if the U.S. employment report for August, due out September 6, is positive.
The economists also expressed confidence that the Federal Reserve could cut interest rates by 0.25% at its September meeting, but added that “another negative employment surprise on September 6 could trigger” a 0.5% rate cut.
Last week, U.S. stocks gained on July retail sales data that beat analysts’ estimates and showed the biggest gain since early 2023. Also, the U.S. Department of Labor released data on August 15 showing jobless claims fell to a one-month low.
What does this mean for Bitcoin? IG Markets analyst Tony Sycamore told Cointelegraph that Goldman Sachs’ recession cut is only a “minor adjustment” and is unlikely to trigger “significant risk flows across asset classes, including cryptocurrencies.”
10x Research head of research Marcus Thielen told Cointelegraph that Bitcoin traders “may view the rate cut positively, but there is a risk that it could also signal a coming recession, in which case we would expect Bitcoin to correct lower as it did in 2019.”
He explained that when the Fed cut interest rates in July 2019, “Bitcoin initially rallied 20%” in a short-lived rally. However, despite the Fed cutting rates twice more later that year, Bitcoin ended 2019 35% below its peak after the first rate cut.
However, not all economists agree that the likelihood of a recession has diminished.
JP Morgan Chief Global Economist Bruce Kasman noted “hints of a larger-than-expected weakening in labor demand and early signs of job losses,” adding that business surveys point to a “loss of momentum in the global manufacturing sector.”
According to JP Morgan, the probability of a recession by the end of 2025 remains at 45%, with Kasman noting “additional uncertainties related to the political environment.”
