Bitcoin Slides as Recession Fears and Trade War Tensions Mount

The possibility of a U.S. recession in 2025 is growing, with analysts pointing to economic uncertainty and escalating trade tensions as key risks.

output: A possibility of a U.S. recession in 2025 is growing, with analysts citing economic uncertainty and increasing trade war tensions as key risks, Chain News reports.

Among pressing concerns are potential budget cuts and a reduction in federal jobs, which could have significant macroeconomic implications, the report notes.

Market expert at Invictus Capital, Nic Puckrin, puts the chance of a recession in 2025 at about 40% and adds that the current economic climate is not optimal for risk assets, including cryptocurrencies.

Discussing capital movements, Puckrin mentions that the U.S. Dollar Index (DXY) has been dropping due to shifts in investor sentiment. As investors become more risk-averse, capital is seen flowing out of the U.S. and into European markets.

The expert notes a sharp decrease in the DXY occurred in March, indicating broader macroeconomic concerns and capital outflows from the U.S.

Moreover, President Trump’s tariffs have contributed to market instability, leading to a strong sell-off in the crypto sector. Bitcoin (BTC) is now down 24% from its January peak of $109,000, while altcoins have sustained even steeper declines.

The heightened trade war fears have seen a complete reversal in market sentiment from post-election optimism to extreme caution.

Analysts suggest the pressure on crypto markets could continue at least until April, pending any positive developments in trade negotiations.

However, some experts are detecting signs that Bitcoin could be nearing a bottom.

10x Research's head of digital assets, Markus Thielen, notes that a shift in Trump’s trade rhetoric could be the key factor for a potential recovery in crypto prices.

If the administration shows signs of softening its stance on tariffs or indicates progress in trade negotiations with a possibility of compromises, it could trigger a reversal in Bitcoin’s trajectory from its recent sell-off.