Renowned economist Henrik Zeberg has issued a cautionary statement, predicting a significant economic downturn in 2025, drawing parallels with a historical economic crisis that occurred nearly a century ago. Zeberg believes that Bitcoin (BTC) and altcoins will be among the hardest-hit assets during this impending economic storm.
What Will Trigger the Economic Downturn?
Zeberg shared his insights on social media platform X, forecasting that risky assets such as stocks and cryptocurrencies will experience growth in the coming months. However, he warns that this upward trend will abruptly end by the year’s close, just as market participants become overly optimistic.
According to Zeberg, U.S. markets will initially rise, with a peak surge as investors withdraw from large and foreign markets, leading to an increase in the cryptocurrency market and small-cap stocks. He anticipates that this will create a general sense of euphoria among investors who believe that the Federal Reserve will continue to support the market. Despite this, Zeberg expects a major recession to commence by year’s end.
How Will the Fed Respond?
Zeberg predicts that the Federal Reserve will attempt to sustain the economy by printing more money to spur economic growth. However, he argues that these actions will only postpone an inevitable economic collapse. This scenario, he states, will eventually result in stagflation, characterized by slow economic growth, rising unemployment, and high inflation.
Key Takeaways for Investors
– Expect a temporary market surge followed by a significant downturn.
– Risky assets like cryptocurrencies and small-cap stocks will initially rise.
– The Federal Reserve’s monetary stimulus will only delay, not prevent, an economic collapse.
– Prepare for stagflation, with high inflation and slow economic growth.
Zeberg emphasized that the Federal Reserve’s interventions would only create a temporary boost in the market. He stressed that as the economic recession and deflation set in, the Fed’s monetary stimulus would attempt to balance stagflation but would not avert a severe downturn. He predicted that the most significant recession and bear market since 1929 would occur in stages: initial deflation, followed by a temporary surge, and then entering stagflation.
Earlier this year, in January 2023, Zeberg made headlines with predictions that the U.S. stock markets would hit record levels before a sudden crash. At that time, the S&P 500 was around 4,000, and Bitcoin was near $2,000. Presently, the S&P 500 stands at 5,321, and Bitcoin is valued at approximately $70,000.