Recession Statement by US Treasury Secretary Yellen: How Could Bitcoin (BTC) Be Affected?

US Treasury Secretary Janet Yellen said that the recent inflation and employment data in the US encouraged her, but she acknowledged that the economy was at risk of recession due to high interest rates.

US Treasury Secretary Yellen: “Satisfied with Data, But Recession Risk Continues”

“I’m pretty happy with the data I’ve seen so far, but I don’t want to underestimate the risk of a recession given that the Fed is slowing the economy,” Yellen said in an interview with Bloomberg News in Johannesburg as she wraps up her trip to Africa.

An official report released on Thursday showed that the US economy grew at a better-than-expected 2.9% year-on-year rate in the fourth quarter of 2022, although fundamental data pointed to a slowdown in growth.

This may not be surprising in an environment where the FED is aggressively increasing interest rates to reduce high inflation. But this task has historically been difficult to accomplish without shutting down the economy and raising unemployment in a meaningful way.

“I don’t see any real unwinding in economic activity,” Yellen said.

“I am encouraged to see inflation come down,” said the Treasury Chairman, who also chaired the Fed for four years. “There is more talk of layoffs, but basically the labor market remains pretty strong.”

Yellen said Friday that if the economy avoids unexpected shocks, it will depend on the labor market whether the Fed will meet its so-called soft landing target.

How Could Bitcoin Price Be Affected by a Recession in the US?

What about recession scenarios? bitcoin How the price might react, here are the predictions:

  • If the recession is caused by a financial crisis, investors may view Bitcoin as a safe haven and flock to Bitcoin, driving the price higher. This is because Bitcoin is decentralized and not controlled by any country or financial institution, so it is less affected by traditional economic factors.
  • On the other hand, if the recession causes a significant drop in consumer spending, this could lead to a decrease in demand for Bitcoin and a drop in its price.
  • Some investors may view BTC as a risky asset and sell it to secure their money in safer assets, causing its price to plummet.
  • In addition, if the US government decides to take measures against the use of Bitcoin, this could also have a negative impact on its price.
  • The general sentiment of investors and traders also plays a role in the volatility of the BTC price, if the recession causes a negative sentiment, the BTC price may drop.

*Not investment advice.

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