U.S. Recession Fears Boost Bitcoin as Dollar Weakens

20:02 30.04.2025 CVJ.AI Editorial Office

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The U.S. economy contracted in Q1, sparking recession fears and boosting expectations of Fed rate cuts. Bitcoin, despite an initial dip, may benefit as a hedge against a weakening dollar.

Bitcoin may benefit from Fed rate cuts and dollar depreciation despite initial recession-driven dips.
The U.S. Dollar Index (DXY) has declined 8.3% YTD, signaling structural dollar weakness.
Analysts highlight Bitcoin's decoupling from equities and role as a hedge in de-dollarization trends.

📎 Related coverage from: decrypt.co

Other Tags: André Dragosch, BitWise

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U.S. Recession Fears Boost Bitcoin as Dollar Weakens

The U.S. economy shrank by 0.3% in Q1, raising recession concerns and increasing trader bets on Federal Reserve rate cuts this summer. Bitcoin initially fell but analysts suggest it could thrive as a hedge against dollar depreciation. The U.S. Dollar Index (DXY) rose slightly on Wednesday but remains down 8.3% year-to-date. André Dragosch of Bitwise argues that Bitcoin's decoupling from traditional markets and inverse correlation to the dollar make it resilient amid economic uncertainty. Lower interest rates could further boost crypto and risk assets, though a recession may pressure equities. The dollar's weakness aligns with the 'dollar smile theory,' where mediocre U.S. growth leads to depreciation, potentially benefiting Bitcoin.

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