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Why Bitcoin will come out on top in a recession, top analyst claims

Bitcoin moves on in the first week of 2023 with no clear direction. After a rejection from a critical resistance zone, the cryptocurrency back into its range and could be preparing for a retest of support.

Meanwhile, altcoins are thriving, with many posting gains on high timeframes. As of this writing, Bitcoin (BTC) is trading at $16,700 with sideways movement over the past 24 hours. Over the past seven days, BTC has seen similar price action.

Why Bitcoin will come out on top in a recession, top analyst claims, Crypto Trading NewsBTC price is moving sideways on the 4-hour chart. Source: BTCUSDT trade view

BTC short-term, what is driving the price action?

Bitcoin reacts in the short term to macroeconomic developments and the monetary policy of the US Federal Reserve (Fed). As NewsBTC reported yesterday, investors are reluctant to trade in any direction due to the uncertainty in global markets.

Why Bitcoin will come out on top in a recession, top analyst claims, Crypto Trading News

The situation is likely to continue in January. Today, the US released new economic data, but with “mixed” results, according to a pseudonymous analyst:

Economic data somewhat mixed. More jobs than expected but lower hourly wages, which is the second most important number in my opinion. The thing in which the market will digest this is the most telling factor in my opinion.

The unemployment rate in the United States was 3.5% for December 2022, which was much lower than the market was expecting. The Fed uses this metric to measure the effectiveness of its monetary policy.

The higher the unemployment, the more they can do it inflation subdued, but the US jobs market has been resilient and has remained strong despite the Fed’s intentions. In this sense, bitcoin and risky assets responded with small losses.

The lower than expected unemployment results give the Fed scope for further tightening. However, the risk of an economic recession increases as the financial institution pushes to lower inflation.

Will Bitcoin Make It During a Recession?

In a recessionary economic scenario, Bloomberg Intelligence senior macro strategy Mike McGlone believes Bitcoin will thrive. The analyst is bullish on BTC in the long-term, but shared some caveats about its immediate future.

McGlone expects Bitcoin to revisit critical support around $10,000-12,000 in an economic recession. This massive crash will spread across the nascent industry and act as the final catalyst for another rally. The analyst said:

The rising potential for a severe global economic slowdown could be a top crypto performer in 20222. Our bias is that Bitcoin will tend to come out on top in most scenarios (…).

Why Bitcoin will come out on top in a recession, top analyst claims, Crypto Trading NewsSource: Mike McGlone via Twitter

If this scenario continues, the cryptocurrency could be traded as gold and a store of value, similar to what it was in 2020-2021. Right now, BTC is traded as a risk asset, but the status quo is about to change globally as the economy enters a critical phase.

Source: Crypto News Deutsch

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