Like spring in New York, the cryptography market became hot, at the same time, in early May. After weeks to sail on agitated seas, partially influenced by anxieties surrounding the trade in the administration, a palpable change of feeling propelled the cryptographic sphere into a notable rally.
Bitcoin is moved from a rate of anger in a determined hunter of peaks of all time. This upward resurgence was not isolated. The ether, having undergone a significant reduction of more than 50% since the beginning of the year, organized an impressive rebound, winning 36% in the five days which followed the eagerly awaited upgrade of Pectra.
The wider blockchain market reflected this enthusiasm. The Coindesk 20 index, the reference index for the performance of the best digital assets, added almost 18% last week, bringing its yield from 30 days to more than 33%. Further by the capitalization spectrum, the Coindesk 80 index, which follows the active beyond the Top 20, also rebounded strongly from its stockings, offering 37% in the last month. Truly demonstrate epic The width of the participation, the same index Coindesk 50-built added 55% over the week and 86% in the last month.
Given the fundamentally limited (zero) direct impact of prices and commercial news on the intrinsic value of most (all) crypto active, this higher slit resembles what they call a “change of feeling”. With the Coindesk consensus conference which takes place this week in Toronto, the timing could not be more opportune. The vibrations are good.
Coindesk 20 performance, Coindesk 80, Coindesk Memecoin Index, Bitcoin and Ether since the Liberation Day, April 2, 2025
Source: Coindesk indices
The spectrum of the recession
This recent exuberance of the market, both in digital assets and in traditional risk asset classes, has not repressed the underlying concerns of those who believe that the United States is gradually moving towards a recession. Official recessions, as indicated by the National Economic Research Office (NBER), are indeed relatively rare. However, the unusual confluence of today’s macroeconomic factors provides fertile land for distrust.
Namely, the initial estimate of GDP of the first quarter of 2025 showed a contraction of 0.3% at an annualized rate, a notable reversal of growth of 2.4% in the previous quarter. Admittedly, this figure was biased downwards by an increase in imports while companies rushed to beat the increases in the expected prices, but a contraction in GDP is nevertheless a worrying point of data. Adding to this discomfort plunges consumer confidence. The Conference Board consumer confidence index fell sharply in April at 86.0, its lowest level in almost five years, the expectations index reaching its lowest point since October 2011 – a level often associated with recession signals. The feelings of consumer feelings of the University of Michigan echoes this weakness, falling to 52.2 in its preliminary reading of May, caused by concerns concerning the commercial policy and the potential resurgence of inflation. In addition, their survey highlighted an increase in inflation expectations of one year to 6.5%, the highest since 1981.
The growing burden of the American debt and the persistent inability of the administration to tame the yield of the treasury to 10 years, despite apparent efforts, also contribute to the feeling of economic fragility. Finally, the potential for collateral damage to current or growing trade wars, including companies potentially reducing their workforce in response to disturbed supply chains and increased costs, adds another layer of concern.
Nber table of American unemployment levels and periods of recession since 1978
Source: Nber.org (Hey, Nber, should that read “since 1978?”)
To be clear, the dominant feeling among our network is always based against an imminent recession, and we do not make predictions. However, to reject the possibility of a recession in the current environment seems reckless.
Bitcoin vs other digital assets in a slowdown
Crypto only knew one recession owned at the Nber, during the worst core. Although the market crisis has caused a panic of liquidity and significant withdrawals, the subsequent ocean of 5 billions of dollars of emergency budgetary stimulation (and millions of people at home discovering the crypto) pointed things to the north and delivered the bubble 2021. We may not expect the same path in a future recession. So what could we expect?
On the one hand, there is a convincing argument to argue that Bitcoin has now reached an adoption level and has established a sufficient user base to start making its long -term destiny as a safe refuge asset during periods of economic disorders. With the American dollar potentially confronted with pressure in the middle of high inflation and an swollen debt load, the inherent rarity of bitcoin and the decentralized (and apolitical) nature are more and more attractive.
On the other hand, traditional recession environments are generally characterized by rare liquidity, increased risk aversion, a dominant accent on the preservation of capital and a decreased appetite to explore the classes of emerging and volatile assets. A contraction in global economic activity would also lead to a reduction in the financing of entrepreneurial companies and even established in the blockchain space. Finally, retail users, feeling the financial pinch of a recession, would probably have less “experimental money” to allocate to decentralized finance (DEFI) and other new crypto applications.
Consequently, even if Bitcoin manages to attract safe security flows, other blockchain assets, in particular those who promise future growth and innovation, could face significant opposite winds and continuous price pressure. In our opinion, one of the less Constructive results for the broader digital asset ecosystem would be a new increase in the domination of bitcoin to the detriment of innovation and growth in other areas.
Trading resilience
What could provide a certain degree of resilience for the class of digital assets and industry as a whole is its energy for trading. Crypto works more as a class of commercial assets than that mainly focused on investment. Under economic conditions, both favorable and unfavorable, commercial volumes on cryptographic markets have generally remained robust and resilient. It is conceivable that the active commercial community can maintain the asset class until wider economic conditions improve.
Uncertainty navigation
Although a recession in the United States is a scenario that is not very desire and which remains outside the highest probability results in most forecasts, and despite the recent change of feeling, its possibility cannot be completely rejected. And, in the event of economic cycles, the periods of contraction are not entirely avoidable. For the good of our booming industry and the progress made in the integration of digital assets into the fabric of global financial services – through trading, investment, loans, savings and generation of elements – we sincerely hope that even a modest support flow will continue to stimulate technological development, investor education, accessibility and broader adoption. Perhaps this will be fueled by one of the original notions of the crypto: that the traditional economic system has weakened.
