**Goldman Sachs Raises Recession Odds in the U.S. and Supports Fed Rate Cuts**
In a recent analysis, investment banking powerhouse Goldman Sachs has heightened the likelihood of a recession in the United States. Alongside other major financial institutions, the bank has also endorsed additional policy rate cuts by the Federal Reserve in light of the ongoing economic challenges. Many analysts are optimistic about Bitcoin’s (BTC) potential to rebound after recently dipping below the $80,000 mark.
**Fed Rate Cuts To Boost BTC Price**
Goldman Sachs forecasts that the Federal Reserve will implement a 25 basis point reduction in interest rates at each of its next three meetings. This outlook resonates with similar views on Wall Street, where calls for lower rates are gaining traction. Both Wells Fargo Investment Institute and JP Morgan have adjusted their expectations to anticipate three rate cuts. Previously, JPMorgan had suggested two cuts, projecting policy rates to drop to 4.25%. Overall, most firms are estimating a total reduction of 116 basis points, indicating a decrease in at least four out of five Fed meetings. This forecast is a significant boon for the cryptocurrency market, as it is expected to encourage fund flows into riskier assets. Conversely, rate hikes typically prompt investors to withdraw funds from these assets, as the Fed aims to combat inflation. A series of interest rate cuts could catalyze a market recovery, especially with signs of increasing institutional demand. Recent developments, such as the approval of spot crypto ETFs, have further stimulated traditional finance (tradfi) participation. A shift towards lower rates now could draw Wall Street’s attention back to the market. A similar scenario unfolded in 2024 when global policy rate cuts followed central banks reporting easing inflation. It’s important to note that the current heated macroeconomic environment continues to correlate with cryptocurrency prices. As of now, Bitcoin is trading at $79,688, having dropped over 6% in the last 24 hours. The broader market has also seen a decline of more than 5%, reducing the total market capitalization to $2.47 trillion. Bitcoin enthusiasts are currently eyeing an institutional-driven rally that could push prices up to $90,000.
**Is A United States Recession Imminent?**
The sweeping tariffs introduced during President Trump’s administration have had a significant impact on global trade, adversely affecting U.S. stocks. This decline in confidence has led to substantial outflows, resulting in considerable losses for investors. In light of recent economic challenges, Goldman Sachs has raised the probability of a U.S. recession to 45%. This marks the second increase in just a week, as economists assess the repercussions of the tariffs. Last week, the bank adjusted its recession estimate from 20% to 35%. Meanwhile, JPMorgan has placed the odds even higher at 60%, citing inflation and other factors stemming from the widespread tariffs. This comes as various firms are revising their U.S. economic growth forecasts for 2025.
