For the last several months, recession talks have dominated the market. Crypto is a new economic asset that market experts have integrated into the conversation about recessions. Elon Musk, the famous SpaceX CEO and business mogul stated that the US economy might sink into a recession and be “tough going” for 12 to 18 months. Lloyd Blankfein, the senior chairman at Goldman Sachs, also stated that the United States should be prepared for a recession.
Elon Musk says the United States could already be in a recession
On Wall Street, more than half of investment and economic experts believe that the Federal Reserve’s effort to combat inflation by raising interest rates and selling assets will eventually result in a recession. Others share the same sentiments. Musk appears to hold Biden responsible for the economic downturn. He blamed inflation in the United States on White House policies.
This administration, it doesn’t seem to get a lot done. The Trump administration, leaving Trump aside, there were a lot of people in the administration who were effective at getting things done. The obvious reason for inflation is the government printed a zillion amount of more money than it had. The government can’t just issue checks for an excessive revenue without there being inflation. The velocity of money held constant. This is not, like, supercomplicated.
Elon Musk.
A deluge of data from across the globe is now coming at a critical moment in the debate over whether central banks are raising interest rates into a potentially severe worldwide economic slowdown. And what comes next after a crypto-currency collapse is also of concern.
At the moment, cryptocurrency enthusiasts and spectators alike are waiting for the consequences of a spectacular price drop. Bitcoin has fallen to its lowest level in over a year. With central banks getting more aggressive on inflation, investors have abandoned risk assets.
The algorithmic stablecoin TerraUSD has broken its peg and dropped to zero. Whether stablecoins can keep their dollar pegs when investor confidence plummets will determine whether or not they can do so.
In addition, Elon Musk does not think that a recession is such a terrible thing. Musk jokingly said that “an economic enema” would eventually be required to unclog the pipes.
Recessions are not necessarily a bad thing. I’ve been through a few of them. And what tends to happen is if you have a boom that goes on too long, you get a misallocation of capital. It starts raining money on fools, basically. And sort of the bullshit companies go bankrupt, and the ones that are doing useful products are prosperous.
Elon Musk
Musk isn’t an economist, but he’s far from the first high-profile figure to suggest that a recession may be on the way. To add to the list, former Goldman Sachs CEO Lloyd Blankfein said there was a “very, very high” probability of another recession on CBS. In April, Deutsche Bank economists predicted the United States would enter a recession in 2023 due to higher prices and interest rates.
The Fear and Greed Index is a popular measure of cryptocurrency market sentiment that is both simple and effective. Its value fell to 8 on a 0-100 scale recently, which was the lowest it has been in two years during the COVID-19 crash. Today’s extremely low values of the Fear and Greed Index suggest that the cryptocurrency market is experiencing extreme fear.
The Fear & Greed Index is a method for determining stock market activity and the degree to which equities are reasonably valued. The idea gets based on the belief that excessive fear depresses stock prices, while excess greed has the opposite effect.
The Fear & Greed Index is a compilation of seven indicators that examine various aspects of stock market activity. They are market momentum, stock price robustness, stock price breadth, put and call options, junk bond demand, market volatility, and safe-haven demand.
After the tremendous swings in the US stock market, a Bloomberg reporter asked if the nation was entering a recession. Blankfein stated:
We are certainly heading. It’s certainly a very, very high-risk factor…If I were running a big company, I would be very prepared for it. If I was a consumer, I would be prepared for it.
Lloyd Blankfein.
Market experts addressed crypto assets, stablecoins, and the long-anticipated ETH 2.0 merger in the last few hours. Ethereum was first on their list, home to Defi and many other cryptocurrency projects. The blockchain, according to experts, has proved to be successful and has faced issues that ETH 2 addresses. However, there appeared to be a question if Ethereum was on its way.
Furthermore, the wheat crisis in India has bolstered recession talks. After announcing a complete export ban on wheat, India reduced the restrictions to allow traders to fulfill some of their obligations. All wheat that was awaiting shipment before the ban will be allowed for sale.
The news that India had banned wheat exports stunned the whole global food market, causing wheat prices to rise sharply. Furthermore, the Russo-Ukrainian war has not spared consumers from financial difficulties worldwide. This latest turmoil might cause higher petrol costs and, as a result, an economic imbalance.
Source: https://www.cryptopolitan.com/recession-set-for-18m-as-crypto-tanks-musk/