Bitcoin Recession Narrative May Be Premature, Warns 10x Research

Bitcoin’s rally hopes tied to a potential recession may be overblown in the short term, warns 10x Research’s Markus Thielen. In a new market report dated April 11, the head of research explained why Bitcoin’s macro setup might not be as bullish as many investors expect, despite recent signs of monetary easing on the horizon.

Thielen cautioned that “expecting a bullish impulse is too early” as credit spreads continue to widen, a strong indicator that recessionary fears are intensifying across the U.S. economy. While Bitcoin could benefit long-term from lower interest rates and central bank easing, short-term headwinds remain in play.

Bitcoin Faces Macro Headwinds Despite Rate Cut Hopes

Historically, Bitcoin has responded poorly to initial rate cuts or currency devaluations, according to Thielen. The asset’s price often sells off before regaining strength, as the first rate cuts signal economic weakness rather than opportunity. “Normally, Bitcoin first sells off when China devalues or the Fed cuts, as the first cut might not be so impactful,” Thielen told Cointelegraph. “It also confirms economic weakness.”

At the time of writing, Bitcoin (BTC) is trading near $80,620, down from its recent all-time high above $73,000 in March. While some analysts continue to promote the Bitcoin recession narrative as a bullish setup, others suggest that the current macro signals, particularly rising credit spreads, indicate more downside risk ahead.

Credit Spreads Widen as Traders Eye May Fed Decision

Credit spreads — the gap between yields on corporate bonds and U.S. Treasuries — are a key indicator of economic health. Thielen notes that rising spreads suggest growing stress in credit markets, which historically precedes a downturn in BTC macro forecasts.

Meanwhile, the U.S. Dollar Index (DXY) sits at 100.337, down nearly 3% over the past week. While a weaker dollar usually benefits risk assets like Bitcoin, traders remain cautious. “The US dollar has exited the room. Once again, something is broken,” posted The Kobeissi Letter on X, reflecting market uncertainty. According to CME’s FedWatch Tool, there’s a 64.8% chance that the U.S. Federal Reserve won’t cut interest rates at its May meeting — highlighting continued division among market participants over the future path of monetary policy.

Long-Term BTC Outlook Still Positive in Recessionary Scenario

Despite short-term volatility, analysts like BlackRock’s head of digital assets Robbie Mitchnick maintain a positive long-term outlook. “I don’t know if we’ll have a recession or not, but a recession would be a big catalyst for Bitcoin,” Mitchnick said in late March.

This perspective aligns with the typical behavior of crypto markets during periods of central bank easing. As the Fed eventually cuts rates more aggressively, Bitcoin and other digital assets could benefit from increased liquidity and renewed investor appetite for alternative stores of value. Still, 10x Research’s view remains cautious in the short term. As Thielen summarizes, “This pattern suggests that while a longer-term opportunity may emerge, Bitcoin could still face pressure in the near term.”