As the U.S. economy contracted at an annualized rate of 0.3% in the first quarter of 2025, concerns surrounding a potential recession have emerged, leading to market fluctuations for Bitcoin and other cryptocurrencies. André Dragosch, European head of research at Bitwise, stated that a recession could ultimately induce the Federal Reserve to lower interest rates, which historically benefits risk assets like Bitcoin. The prospect of rate cuts is reinforced by the declining U.S. Dollar Index (DXY), which has fallen by 8.3% year-to-date. Dragosch believes that while initial reactions from the market may have been negative, the ongoing economic scenario could provide a tailwind for Bitcoin by increasing liquidity and reducing borrowing costs. In contrast to traditional equities that may suffer in a recession, Bitcoin could maintain its value due to its unique position as a digital asset, potentially serving as a hedge against economic downturns.

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