A COVID-Like Macro Environment: Is Bitcoin Undervalued?

Dragosch explains that the last time he observed such a compelling market structure was in March 2020, when intense global uncertainty pushed Bitcoin from around $8,000 to below $5,000. Today, he argues, Bitcoin is once again behaving as though market sentiment and macroeconomic expectations are deeply out of sync.

He notes that Bitcoin appears to be “pricing in the most bearish global growth outlook since 2022,” a year marked by aggressive Federal Reserve tightening and the collapse of major crypto firms like FTX.

Bitcoin Has Already Priced In a Recession Scenario

According to Dragosch, Bitcoin is trading as if a recession were already underway. He emphasizes that much of the negative news flow is already reflected in the current price. This contrasts with U.S. Treasury Secretary Scott Bessent’s recent reassurance that the country is not projected to enter a recession in 2026.

Market structure, however, has remained shaky. After hitting a new all-time high of $125,100 on October 5, Bitcoin entered a decline triggered by a $19 billion liquidation event on October 10. Additional pressure came from U.S. President Donald Trump’s announcement of 100% tariffs on Chinese imports.

Sentiment worsened further when Bitcoin slid below the psychological $100,000 threshold on November 13. The price briefly dipped under $90,000 on November 20 before rebounding above the level in the following days.

Global Growth Could Strengthen Through 2026

Dragosch believes that earlier monetary stimulus could start feeding into global markets, supporting economic expansion into 2026 — a pattern similar to the post-COVID recovery phase. This, he suggests, could lay the foundation for significant upside in Bitcoin.

“I genuinely think we’re looking at a similar macro backdrop right now,” he said, indicating optimism toward Bitcoin’s medium-term trajectory.

Market Participants Are Also Leaning Bullish

Other analysts share this perspective. Crypto trader Alessio Rastani argues that the latest pullback does not indicate a new bear cycle, but instead resembles a historically repeating setup that has preceded strong rallies about 75% of the time.

Meanwhile, BitMine Chair Tom Lee recently expressed confidence that Bitcoin will reclaim the $100,000 mark before year-end and could even push toward new all-time highs.

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Artificial Intelligence: Growth Engine or Bubble?

El-Erian highlighted the role of artificial intelligence (AI) investments in the U.S. economy, asserting that the rapid growth in this sector is inevitable. “AI is a revolution reshaping the economy. I’m not worried; if there’s a bubble, it’s one built on solid foundations,” the economist said, noting that while some projects may fail, the overall trend will remain positive. Observing changes in central banks’ reserve strategies, El-Erian predicted that AI will create new opportunities in global trade. These investments appear set to impact not only tech companies but a wide range of industries.

Gold vs. Bitcoin: Speculative Growth vs. Safe Haven

With gold prices breaking records in recent months, El-Erian predicted that the price per ounce could exceed $5,000 by the end of 2025. As for Bitcoin, El-Erian referred to it as “gold’s younger cousin.” “Bitcoin resembles gold as a store of value, but its speculative elements still dominate. Its institutional buyer base is limited, so volatility is high. Still, over time, a robust ecosystem will form, and it will gain gold-like characteristics,” he said.

This comparison suggests Bitcoin is still in its maturation phase. While gold maintains its safe-haven status with decades of stability, Bitcoin’s institutional adoption (e.g., through ETFs) makes it more accessible. However, El-Erian warns against short-term volatility: despite Bitcoin’s market cap nearing $2 trillion, regulatory uncertainties pose risks.

Shadows in Banking: The Danger of Risk Appetite

Supporting JPMorgan CEO Jamie Dimon’s “cockroach analogy,” El-Erian stated that issues in the U.S. banking sector stem from the pursuit of high returns. “If there’s one problem, it can spread, but I don’t expect a systemic collapse,” the economist said, predicting that regulations will help the sector recover. This serves as a call for investors to diversify.

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A Clear Signal for the Next Meeting to Rate Cuts

Reiterating his earlier stance, Waller stated that the Fed should move ahead with a rate cut at its upcoming policy meeting. He also suggested that multiple rate reductions could follow in the months ahead, depending on economic data.

Flexibility in the Pace of Cuts

Waller emphasized that the Fed does not need to stick to a rigid pace when adjusting interest rates. “We can always recalibrate the speed of cuts,” he explained. This underscores the central bank’s data-driven approach, allowing it to adapt policy in response to evolving conditions.

Concerns Over the Labor Market

Another key point raised by Waller was the recent softening in the labor market. He stressed that the Fed must act to prevent further deterioration, highlighting the central bank’s dual mandate of maintaining price stability while supporting employment.

Inflation Outlook for Rate Cuts

While acknowledging that inflation could see slight upward moves in the short term, Waller dismissed concerns of a lasting rebound. He expects inflation to move closer to the Fed’s 2% target over the next six months, reinforcing confidence in the current policy path.

Growth Expectations: Slowdown, Not Recession

Waller ruled out the likelihood of a recession but noted that U.S. economic growth is likely to decelerate. He also argued that while tariffs may weigh on growth this year, they are unlikely to create long-term inflationary pressures.

Addressing Fed Chair Speculation

Finally, Waller clarified that he has had no discussions regarding the possibility of becoming Fed Chair, putting an end to speculation surrounding his potential candidacy.

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What Are Fed Officials Saying?

Fed Chair Jerome Powell, in his speech at the Jackson Hole Economic Policy Symposium, stated, “With policy in a restrictive zone, the underlying outlook and shifting risk balance may require us to adjust our policy stance.” This statement was seen as an important signal increasing the likelihood of a rate cut.

Fed Board Member Christopher Waller also mentioned that additional rate cuts could be on the agenda over the next 3 to 6 months after September, noting that rates should be gradually brought down to the neutral level of around 3%.

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Economic Data and Market Expectations

Recent economic data supports a Fed rate cut decision. While there are signs of weakening in the labor market, inflation remains close to the Fed’s 2% target. This increases the likelihood of the central bank adopting a looser monetary policy.

Major investment banks share the same expectation of a rate cut. Institutions like Morgan Stanley, Goldman Sachs, and JP Morgan see a high probability of a 25 basis point rate cut in September.

What Happens If Rates Are Cut?

If the Fed decides to cut rates, this could have various effects on global markets. The U.S. dollar may weaken, emerging market currencies may strengthen, and gold prices could rise. Additionally, a rate cut could boost investor risk appetite, creating a positive atmosphere in stock markets.

In general, the likelihood of a Fed rate cut in September appears high. Market expectations and Fed officials’ statements send strong signals in this direction. This decision could have significant effects not only on the U.S. economy but also on global markets. Investors and economic observers are advised to closely monitor this critical decision to be announced on September 17.

Is There a Recession Risk?

A recession is a period of economic slowdown characterized by a noticeable decline in production, consumption, and employment. In other words, it is a phase where the economy “slows down.”

In more detail:

1. Production and GDP decline: A country experiences a recession when the total value of goods and services it produces (GDP) decreases for several consecutive quarters.
2. Employment falls: Companies may lay off workers if demand drops, causing unemployment to rise.
3. Consumer spending and investment decrease: People cut back on spending, and companies reduce new investments.
4. Overall economic slowdown: Banks become cautious in lending, markets fluctuate, and confidence declines.

In short, a recession is a period when the economy slows down and many people are negatively affected in terms of both jobs and income.

As a possible rate cut is discussed in September, the most critical question on investors’ minds is: “Is the U.S. economy heading into a recession?”

Economic data:

• Although the labor market remains strong, employment growth has slowed in some sectors.
• Consumer spending and industrial production are showing a more cautious trend compared to previous periods.
• Inflation remains stable around the Fed’s 2% target, but elevated levels maintain price pressures.

These data show that the Fed is facing a double-edged sword:

• Keeping rates high helps reduce inflation but can slow economic growth.
• Cutting rates supports growth but may push inflation higher again.

Most economists state that the U.S. is not technically in a recession but that growth is slowing. If the Fed cuts rates in September, this move will both boost market sentiment and aim to reduce growth risk. However, some experts emphasize that multiple rate cuts may be necessary, and this does not entirely eliminate the risk of a recession.

In other words, a rate cut is seen as a measure to reduce recession risk, but it is not guaranteed to eliminate it entirely. It is critical for investors to closely monitor economic data and carefully evaluate Fed statements.

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In line with market expectations, the decision was notably rare in that it required two rounds of voting by the Monetary Policy Committee (MPC). The rate cut was approved by a narrow 5-4 majority, reflecting the deep uncertainties surrounding the UK’s economic outlook.

A Delicate Balance Between Inflation and Recession

BoE Governor Andrew Bailey stated that the rate cut was a “finely balanced decision,” adding that any future reductions would need to be gradual and carefully assessed.

Ongoing volatility in inflation continues to put pressure on policymakers. Due to sharp increases in food prices, inflation is expected to climb back to 4% by September. However, according to the BoE, it is projected to drop below 3% by the summer of 2026 and only reach the official 2% target by 2027.

The UK economy contracted in both April and May, and the unemployment rate has also been on the rise. While inflation had previously eased following the Russia-Ukraine conflict, renewed upward pressure is creating additional challenges. This suggests that further interest rate decisions will require a more cautious approach.

Although the BoE’s rate cut offers temporary relief by lowering borrowing costs, both global and domestic risks demand a careful and measured monetary policy stance moving forward.

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Economic signals are mixed: GDP contracted in the first quarter, while both consumer and business confidence declined. On the other hand, the labor market remains strong and consumer spending is still robust. This contradictory picture makes it difficult to determine whether a rate cut is on the horizon.

What Will the Fed Decide? Inflation Signals Remain Mixed

The Fed’s preferred inflation gauge, the PCE Index, fell to 2.3% in March, marking the lowest level in six months. However, core inflation, which excludes food and energy, remains elevated at 2.6%. In addition, President Trump’s tariff policies may push inflation higher later this year, prompting the Fed to stick with a cautious “wait-and-see” approach.

Strong Labor Market, Weak Confidence

In April, 177,000 new jobs were created, and the unemployment rate held steady at 4.2%. This limits the urgency for the Fed to lower rates in the near term. Yet soft data — including business surveys and corporate sentiment — paints a picture of widespread economic uncertainty.

Without clarity on policy, especially on trade and tariffs, the Fed is unlikely to make any sudden moves. For now, the most probable scenario is that the policy rate remains in the 4.25% to 4.50% range until the July 29-30 meeting.

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Trump Talks About Tariff Cuts

“These things always affect you a little bit,” Trump said of the discussions. But he made it clear: “There’s no specific number, no specific red line that would make me change course.”

This statement shows that Trump is not considering any flexibility in his trade policies and is determined to continue his approach to tariffs. Trump, who particularly emphasized how important tariff policies are for economic stability, stated that developments such as financial crises or the weakening of the dollar are not sufficient reasons for him to back down on these policies.

Customs Duties and Economic Stability

Trump states that customs duties not only increase government revenues, but are also critical for protecting the American workforce. The president, who particularly emphasizes that cheap goods coming from foreign countries harm domestic producers and increase unemployment rates, states that high tariffs are necessary for the long-term interests of the economy for these reasons.

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BlackRock CEO Fink: Long-Term Buying Opportunity Despite Recession Concerns

BlackRock CEO Larry Fink made remarkable assessments about the US economy. According to Fink, the country is not on the verge of a recession, but has probably already entered a recession. These statements coincided with the increasing volatility in the market in recent weeks, rising inflation pressure and uncertainties about tariffs. While all these factors increase investors’ anxiety, Fink draws an optimistic picture for long-term investors.

“Slowdown Has Already Started”

Following the publications he attended and the meetings he held with CEOs, Fink stated that there is a general perception of stagnation in the business world. “The cumulative effects of tariffs, rising input costs and political uncertainty have damaged business confidence,” Fink said, arguing that this environment has increased the possibility of a recession.

“This Is Not The Time To Sell”

Despite all the negativity, Fink emphasizes that long-term strategic investment should be made instead of short-term panic. According to him, the recent declines in stock markets are not a sign of exit, but rather a valuation correction. “We may see additional declines of up to 20% in the markets,” Fink says, adding that this environment does not indicate a systemic collapse but an opportunity for capital to reposition itself.

Tariff Wars and Inflation Risks

Fink stated that the tariffs that increased due to the aggressive trade policies of the US administration have increased consumer prices, and that this situation has created uncertainty in the markets. He warned that the negative effects of these policies could deepen even further, especially in an environment where there is a labor shortage.

However, Fink says that it would be wrong to compare today’s picture to the 2008 crisis. According to him, there is no systemic problem in either the banking sector or corporate balance sheets. He said, “This is not a financial crisis; it is a macroeconomic and political correction,” and indicated that the markets are in a different dynamic.

“Avoid Panic, Think Long Term”

Fink’s message is clear: short-term volatility should not scare investors. Opportunities arise for those who make disciplined investments. Those who have capital and are patient can use this period to structure their portfolios for the long term. “Turbulent periods are when the foundations of the strongest portfolios are laid,” says Fink, calling on investors to focus on the next 10 years rather than short-term returns.

As a result, markets may continue to fluctuate. However, according to the BlackRock CEO, opportunities also flourish in the shadow of such periods.

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According to Kalshi, the odds of a US recession in 2025 have jumped to 61%, nearly double from March 20. The platform defines a recession as two consecutive quarters of negative GDP growth, using official data from the U.S. Department of Commerce.

Similarly, traders on Polymarket now price the probability of a 2025 US recession at around 60%.

Market Chaos and Recession Fears

Trump’s move sparked a sharp sell-off in capital markets, wiping over $5 trillion in shareholder value within days. Market analysts now warn of a prolonged bear market affecting global markets and depressing prices across risk assets — including cryptocurrencies.

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Despite this, Trump insists the tariffs will ultimately benefit the US economy. On April 3, he said, “The markets are going to boom,” describing the sell-off as an expected part of the process.

Rates Under Pressure

Asset manager Anthony Pompliano speculated that Trump may be intentionally crashing the markets to influence interest rates. He pointed to the drop in 10-year US Treasury yields from 4.66% in January to 4.00% on April 5.

In an April 4 Truth Social post, Trump called on Fed Chair Jerome Powell to take action: “This would be a perfect time for Fed chairman Jerome Powell to cut interest rates.”

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Stock futures in the US turned red ahead of the announcement, with DOW futures dropping 206 points and S&P 500 futures down 0.56%. This led Bitcoin to slip to $81,656, recording its 7th consecutive day of losses. Meanwhile, the S&P 500 is down 6.3%, the Nasdaq fell 8.1%, and the DOW lost 5.2% in March.

Reasons Behind Bitcoin’s Decline

A weak demand in spot markets and a clear derisking approach by investors avoiding fresh positions in BTC futures markets contributed to the downward momentum. Last week’s core Personal Consumption Expenditures (PCE) data revealed a higher-than-expected inflation rise, and the Conference Board’s consumer confidence index hit a 12-year low.

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Goldman Sachs raised the 12-month recession probability from 20% to 35%, citing weak household and business confidence and a greater tolerance from White House officials for near-term economic weakness.

Is There a Silver Lining for Bitcoin?

Despite the bearish sentiment, institutional investors continue buying Bitcoin, with spot ETF inflows remaining positive.

On March 30, MicroStrategy CEO Michael Saylor reinforced his bullish stance by posting his famous Bitcoin orange dots chart, stating, “Needs even more Orange.”

Data from CryptoQuant also shows Bitcoin inflows to accumulation addresses rising throughout the month.

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