This morning, Ki Young Ju made a striking announcement, declaring the start of a bear market in cryptocurrencies. He anticipates a downturn lasting between six months to a year, based on various on-chain metrics. Nonetheless, predicting when a bullish phase may return is proving to be quite challenging, especially as global economic conditions shift. Recently, Fitch Ratings revised its economic forecasts, highlighting significant changes ahead.
What Are the Updated Economic Predictions?
The United States is entering a global trade conflict, leading to a notable decrease in growth expectations worldwide. Fitch Ratings outlines three vital consequences stemming from this trade war initiated by the current administration: reductions in both U.S. and global growth, an uptick in U.S. inflation, and delays in Federal Reserve interest rate cuts. These developments could spell trouble for Bitcoin and other cryptocurrencies, which still lack the status of safe-haven assets.
How Does the Trade War Impact Cryptocurrencies?
The effective tariff rate in the U.S. surged from 2.3% to 8.5% in 2024, with further increases anticipated. Tariffs imposed on China stand at 35%, while those on Canada, Europe, and Mexico are set at 15%, marking the highest levels in nearly a century. This escalating situation raises concerns about the implications for the cryptocurrency market.
- Reduced U.S. growth forecast from 2.1% to 1.7% for 2025.
- Global growth rate expected to drop to 2.3% this year.
- Heightened tariffs could lead to increased consumer prices.
- Projected inflation rise may prevent interest rate cuts until late 2025.
With these economic indicators painting a bleak picture, the landscape for cryptocurrencies appears increasingly uncertain. The challenges posed by the rising tariffs and shifting growth forecasts have left many wondering about the stability of digital currencies as reliable investments. The coming months will be crucial as traders navigate this turbulent environment.
