According to a model tracked by JPMorgan Chase & Co., a US recession is becoming increasingly likely. Researchers from the New York-based finance giant told Bloomberg that there is about a 28% chance of a recession arriving within the next year, and a more than 60 percent chance of one occurring over the next two years. The odds of a recession happening within the next three years are over 80 percent.
It’s worth noting that JPMorgan’s predictions stand in obvious contrast to data from a recession tracker maintained by the Federal Reserve Bank of New York, which suggests a 14.5 percent chance of recession in 2019. JPMorgan’s model, however, tracks a detailed range of indicators, including prime-age male labor participation, compensation growth and durables, and structures as a share of gross domestic product.
A June report from the Associated Press which polled expert economists revealed that 18 percent of those polled thought a recession would hit the US by the end of 2019. The consensus among the pessimists was that Trump’s tax cuts have provided some relief, but retiring baby boomers combined with lower productivity rates among the younger population will become too great a burden for the economy to bear.
Now for the obvious question, what would a recession mean for the future of crypto? In the last 6 months we have seen increased activity from major financial institutions like Fidelity, Goldman Sachs and Citigroup in creating platforms intended to introduce institutional investors into the digital money market. A Nasdaq trading desk is also likely to open within the next year. Finally, with recent seat changes being made within the SEC, we may even see Bitcoin ETFs soon become available.
While growing support from institutional investors is key to the success of cryptocurrency, one wonders whether or not the digital money market would lose its institutional support in the wake of a recession.
Recent research from experts a Juniper points out that cryptocurrency has continually missed opportunities to gain mainstream traction—most notably when economic strains stemming from poor trade relations between the US and China were at their heights. Conversely, we have seen crypto skyrocket in popularity in South America, as Venezuela and Argentina face the threat of complete economic collapse. But a US recession won’t likely leave millions starving in the streets. Only time will tell, but the possibility of a very real test of the legitimacy of crypto will almost certainly present itself if JPMorgan’s models are accurate.
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