Bitcoin and Cryptos Push Higher Overall Despite Recession Fears and Fed’s Rate Hike

Man looking at upward trending data on his smartphone.

Image source: Getty Images

The crypto asset class is showing surprising resiliency in the face of an unofficial recession report today and higher borrowing rates.


  • Reported data from the Commerce Department today show that the US economy shrank 0.9% in the second quarter, marking two straight quarters of decline, which has been the classic — albeit unofficial — definition of a recession.
  • Yesterday, the Federal Reserve announced its intent to jack up the target federal funds rate by 0.75%, which will increase the cost of debt and borrowing for consumers by 2.25%-2.50% to try and slow record inflation levels.
  • Despite that economic one-two punch, the broader crypto markets are 8.55% higher this morning as the entire valuation of the cryptocurrency sector increases above the $1.07 trillion level according to CoinMarketCap at press time.

It’s reported this morning that the US economy shrank 0.9% for the second quarter, following the 1.6% reduction in productivity we experienced in the first quarter. The preliminary data from the Commerce Department suggests the country is already in a recession, although unofficially, as the traditional definition of a recession is two straight quarters of productivity declines.

That news, coupled with yesterday’s announcement from the Fed that it plans to increase the short-term interest rate on borrowing by another 0.75% to try and quell inflation, was generally expected to further hurt risky investments such as cryptocurrency. But that doesn’t appear to be happening this morning.

Despite that double-whammy of dour economic news, the crypto market has pushed above the $1.07 trillion threshold over the past 24 hours and is up a surprising 8.55% for that same timeframe across cryptocurrency exchanges, according to CoinMarketCap data. At the time of writing, Bitcoin is up 9.5%, pushing above the $23,500 price point. This is largely due to the fact that the US dollar has been weakening under these macroeconomic conditions, boosting cryptocurrencies as an investment alternative.

An official recession is more likely to occur

In June, the inflation rate compared to the prior year hit another 40-year high of 9.1% and represented the 13th straight month of inflation in mid-single digits. That inflation trend has forced the Fed to boost interest rates to try and slow the inflation contagion — at the risk of pushing the economy into a full-blown recession and weighing the dollar down further.

“The contraction in second-quarter GDP significantly raises the risk that the economy will fall into recession by year-end…lagging momentum leaves the economy vulnerable to further adverse shocks such as a potential energy crisis in Europe or intensified supply strains in the second half of the year,” said Bloomberg economist Yelena Shulyatyeva.

Following the Federal Reserve’s Open Market Committee meeting yesterday, Chair Jerome Powell noted that inflation is too high and the labor market is too tight. He also said that we should expect more rate increases in the near term, but those decisions will be made based on data. In the meantime, digital assets are experiencing a moment in the sun, despite significant double-digit losses suffered during the current crypto winter.

Our top crypto play isn’t a token – Here’s why

We’ve found one company that’s positioned itself perfectly as a long-term picks-and-shovels solution for the broader crypto market — Bitcoin, Dogecoin, and all the others. In fact, you’ve probably used this company’s technology in the past few days, even if you’ve never had an account or even heard of the company before. That’s how prevailing it’s become.

Sign up today for Stock Advisor and get access to our exclusive report where you can get the full scoop on this company and its upside as a long-term investment. Learn more and get started today with a special new member discount.

Get started

Earn a $50 bitcoin bonus

Our updated list of the best cryptocurrency apps for 2022 is packed with best-in-class picks. The cryptocurrency apps that landed on our shortlist include perks such as $0 commissions, and one pick that is offering a $50 bitcoin bonus. Check out the list here and get started on your crypto journey, today.

Get the top picks

Spread the love