Could Global Recession Affect Crypto Markets? This WEF Report Explains More!
The crypto market has started to show momentum this year, but the continued depressed economic outlook for the world economy could reverse the situation.Based on a WEF report on Jan 16, the International Monetary Fund (IMF) expects around a third of the global economy to enter recession in 2023."Global growth prospects remain 'cloudy' and the risk of a global recession is high."The report added that businesses face a "triple challenge" at the start of 2023. High prices of key inputs, tightening monetary policy and weak demand will undermine any economic recovery.The chief economist also sees staff shortages, talent availability and cost cutting as key factors. This all has an impact on the retail consumer at the bottom.Furthermore, the U.S. savings rate has fallen to the lowest level of around 2.3%. This metric is used to measure the amount of money a person subtracts from their disposable income to set aside for investment.This can have a big impact on cryptoassets that are generally considered high risk. If there is less disposable income to use, there will be fewer investors in risky assets like crypto.An economic downturn is likely to have an even further impact as higher prices squeeze many people, and only the wealthy can afford to get involved in risky crypto investments.With this in mind, it is unlikely that the recovery in the crypto market will be complete in 2023, and the ongoing recovery could continue into 2024.Only when inflation is under control, and the cost of living comes down will the wider economy begin to recover. Only then will there be enough floating capital from the retail sector to take the risk of investing in crypto assets.The market has rallied so far this year, but analysts are warning against a bull trap. There was a slight pullback today, with total capitalization down to $1.03 trillion. However, the market has jumped 24% since the beginning of the year
The crypto market has started to show momentum this year, but the continued depressed economic outlook for the world economy could reverse the situation.
Based on a WEF report on Jan 16, the International Monetary Fund (IMF) expects around a third of the global economy to enter recession in 2023.
"Global growth prospects remain 'cloudy' and the risk of a global recession is high."
The report added that businesses face a "triple challenge" at the start of 2023. High prices of key inputs, tightening monetary policy and weak demand will undermine any economic recovery.
The chief economist also sees staff shortages, talent availability and cost cutting as key factors. This all has an impact on the retail consumer at the bottom.
Furthermore, the U.S. savings rate has fallen to the lowest level of around 2.3%. This metric is used to measure the amount of money a person subtracts from their disposable income to set aside for investment.
This can have a big impact on cryptoassets that are generally considered high risk. If there is less disposable income to use, there will be fewer investors in risky assets like crypto.
An economic downturn is likely to have an even further impact as higher prices squeeze many people, and only the wealthy can afford to get involved in risky crypto investments.
With this in mind, it is unlikely that the recovery in the crypto market will be complete in 2023, and the ongoing recovery could continue into 2024.
Only when inflation is under control, and the cost of living comes down will the wider economy begin to recover. Only then will there be enough floating capital from the retail sector to take the risk of investing in crypto assets.
The market has rallied so far this year, but analysts are warning against a bull trap. There was a slight pullback today, with total capitalization down to $1.03 trillion. However, the market has jumped 24% since the beginning of the year
