Goldman Sachs Drops Recession Forecast: Will $BTC Rise?

• Goldman Sachs lowered likelihood of US recession, from 25% to 20%.
• The adjustment further increases the chances of a Federal Reserve rate cut in September.
• Both are positive moves for $BTC, pointing to a more favorable environment in the latter part of the year.

After better-than-expected CPI data last week, good news about retail sales and jobs data prompted Goldman Sachs to revise their predicted chances for a US recession in the next 12 months.

Goldman Sachs reduced the odds for a recession to 20%, down from 25%. What does that mean for the crypto economy? Let's take a closer look.

Goldman Sachs Lowers the Chance for a US Recession

Goldman Sachs adjusts their prediction for a recession on a monthly basis.

After raising the chance of a recession from 15% to 25% earlier in the summer, they've now dropped the odds back down to 20%.

The odds reflect the insurance company's risk assessment of an impending US recession within the next 12 months. The analysis relies on several economic factors, and serves as an economic benchmark.

The most recent adjustment follows on the heels of several positive economic indicators, including:

• Robust retail sales in July, which showed the highest increase in 18 months and included an improved earnings report from Walmart
• Reduced jobless claims, which reached a one-month low in new unemployment benefit applications last week
• Relaxed CPI data, showing a slowing inflation rate and the increased potential for a soft landing'

Now the insurance giant has dropped the rate back down with an improved economic outlook. One big question still lingers; what will the Federal Reserve do at its next meeting?

How Will The Federal Reserve Respond?

Will the Fed cut the base interest rate? And if so, by how much?

Most analysts expect that there could be a small rate cut. The economic news (though positive), is largely peripheral, and there's enough of a mixed bag to cause doubt.

But the improved economic outlook could influence the Federal Reserve to cut interest rates sooner, rather than holding them steady as they did at their last meeting.

Jan Hatzius (Goldman Sachs chief U.S. economist) anticipates a small cut of 25 BP (base points), but could see a 50 BP cut with further positive data.

Goldman Sachs + Bitcoin: Recession-Proof?

When they're not issuing recession predictions, Goldman-Sachs have been quietly doing something else: buying $BTC.

In particular, Goldman Sachs has developed a preference for the new $BTC ETFs. The company holds seven of the 12 $BTC ETFs currently available, for a total of $400M.

That's quite the change for Goldman Sachs. Key figures at the company previously expressed thatcrypto didn't make sense as an investment class.

The surge of crypto ETF interest comes at a time when wealth management institutions appear to be warming to crypto as a financial tool.

On a more popular level, Bitcoin traders might view the potential rate cuts favorably, anticipating a boost to Bitcoin's value.

The crypto fear and greed index remains mired in FUD, but the Goldman Sachs report shows a positive future outlook for the crypto industry.

References

• Crypto Fear & Greed Index (CoinStats)

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