Fidelity Investments’ global macro director, Jurrien Timmer, predicts that a recession could lead to a significant rally for Bitcoin. In a Twitter post, Timmer stated that for Bitcoin to see substantial gains, current high-interest rates need to decline. He presented a chart that indicates Bitcoin’s expected price range based on its adoption rate and real interest rates. According to the chart, if interest rates decrease, Bitcoin could reach a high of $96,210 by the end of 2025. Timmer believes that in a recession, the Federal Reserve would pivot, causing investors to view Bitcoin and gold as safe-haven investments and drive their prices higher. Furthermore, Timmer suggests that Bitcoin may offer uncorrelated returns in the next market cycle.
Timmer’s analysis suggests that Bitcoin’s performance is influenced by macroeconomic factors such as interest rates and market conditions. Despite its high volatility, Bitcoin’s correlation with equities has decreased recently. Timmer contends that the Federal Reserve’s injection of liquidity into the markets, as it did during the Covid-19 pandemic, is crucial for Bitcoin to reach new all-time highs. He argues that when the money supply exceeds its long-term growth rate, Bitcoin and gold have thrived. As of now, Bitcoin is trading at $26,931, experiencing a 0.5% decrease in the last 24 hours.
In summary, Timmer predicts that a recession and a decrease in interest rates could lead to a substantial rally for Bitcoin. He believes that the Federal Reserve’s actions and market conditions will play a crucial role in Bitcoin’s performance.