Bitcoin (BTC) and Most Altcoins Have Bounced Back Slightly This Week

Bitcoin (BTC) remained stuck above $80,000, while meme coins like Pepe (PEPE), Shiba Inu (SHIB), and Floki (FLOKI) soared

Top U.S. economist Mark Zandi has issued a bleak warning, saying that the country may be sliding toward a recession.

Zandi, who is also the Chief Economist at Moody's, took to X to share his insights. According to Zandi, his number one recession indicator is "flashing bright yellow."

This indicator tracks consumer confidence, which Zandi says is a key driver of economic activity. According to Zandi, consumer confidence has dropped 17 points over the past three months.

"FYI, consumer confidence as measured by the Conference Board is down 17 points over the past 3 months. Remember my #1 recession watch indicator is that if confidence falls by 20 points over 3 months, consumers stop spending and recession ensues about 6 months later. This..."

According to Zandi, a technical recession happens when the US economy contracts for two consecutive quarters.

The stellar returns of Bitcoin (BTC) and most altcoins have come to a halt this week, as the cryptocurrency market has begun to slide.

According to data from Messari, total cryptocurrency market capitalization now stands at around $2.96 trillion. Over the past week, Bitcoin and most altcoins have bounced back slightly.

Bitcoin price is currently above $86,000, while meme coins like Pepe (PEPE), Shiba Inu (SHIB), and Floki (FLOKI) have seen double-digit gains this week.

The cryptocurrency market has been battered in recent months, with Bitcoin falling sharply from its all-time high of nearly $70,000, which it hit late last year.

The downturn has been driven by a number of factors, including the macroeconomic environment, the collapse of major crypto firms, and the potential for increased regulation.

However, despite the recent downturn, Zandi says that he believes the cryptocurrency market is still in a bull market.

"I think we're still in a bull market for crypto, despite the recent downturn," Zandi said in an interview with Real Vision. "We're seeing a lot of interest from institutional investors, and I think that will continue to drive prices up over the long term."

Zandi also said that he believes Bitcoin and other altcoins would do well in a recession.

"My view is that if we do go into a recession, which I think is possible, it would be self-inflicted by Donald Trump's tariffs," Zandi said.

"If Trump ends or scales down his tariffs, which I think he might do if we go into a recession, then we could see a return of risk-on sentiment and investors could flow back into Bitcoin and other altcoins."

A recession is a period of significant economic downturn in which a country's gross domestic product (GDP) declines for two or more consecutive quarters, leading to job losses, business closures, and a rise in the unemployment rate.

It stands in contrast to an expansion, which occurs when the GDP grows for two or more quarters, typically accompanied by economic growth, job creation, and a decrease in unemployment.

Annually, the U.S. economy has fallen into recession an average of once every five to six years, highlighting the cyclical nature of economic activity.

However, history shows that risky assets tend to perform well during a major downturn. For example, U.S. stocks embarked on a decade-long bull run after the Global Financial Crisis in 2008.

Most recently, after initially falling, stocks and cryptocurrencies embarked on a strong bull run. Bitcoin surged from $4,000 in March 2020 to $69,000 in November 2021. Similarly, Ethereum jumped from a low of $80 to $4,940 in the same period.

This rebound was driven by the Federal Reserve, which has a long history of intervening during downturns through rate cuts and quantitative easing.

Risk assets tend to perform well when the Fed lowers interest rates, as cheaper capital encourages risk-on sentiment across markets. If a recession occurs, as Zandi warns, Bitcoin and other altcoins may benefit from such a macro backdrop.

At the same time, Bitcoin and other altcoins may do well if the U.S. avoids a recession. That’s because this recession would be self-inflicted by Donald Trump’s tariffs. As such, his ending or scaling down his tariffs would also push investors back to risky assets.