- Larry Fink, the CEO of BlackRock mentioned on 11 April that he was concerned about the direction of the US economy being close to a recession
- He noted that the consequences of the recent tariff announcements from Donald Trump are starting to take hold.
- History shows that recessions cause rate cuts and quantitative easing, which can contribute to bull runs in the crypto market.
Larry Fink, the CEO of BlackRock, has just sounded the alarm bells again, this time in warning of an incoming US recession. Fink, according to a recent interview with CNBC, has stated that he believes the US could now be entering a recession. While such news would typically spook traditional investors, it could serve as a bullish trigger for the crypto industry.
From slowing inflation to a weakening US dollar, several indicators show that the incoming conditions could be a trigger for a strong crypto rally. Let’s break down what Fink said and what it all might mean for digital assets like Bitcoin.
Larry Fink Says “We Might Already Be in a Recession”
According to the CNBC interview in question, Fink mentioned on 11 April that he was concerned about the direction of the US economy. According to the CEO, the US could already be in a recession, or at the very least, on the brink of one.
He noted that uncertainty has taken hold across several sectors, and the consequences of the recent tariff announcements from Donald Trump are starting to take hold. “I think we’re very close to a recession now, if we aren’t already in one” Fink said. He pointed towards the growing uncertainty among both consumers and business leaders.
He also noted that although certain metrics like job growth and retail sales appear strong, these figures could be misleading. For example, consumers could be rushing to purchase goods ahead of possible price increases from the tariffs. These could temporarily boost sales data and lead to misleading readings.
Tariffs and Uncertainty as Recession Fuel
President Trump recently introduced widespread tariffs, but recently adjusted his approach by temporarily reducing country-specific duties to a general 10%. This rule exempted China, and in response, the Asian country escalated its tariffs on US goods from 84% to a staggering 125%.
Fink emphasized that the ongoing trade war only adds to the possibility of a recession. According to him, “longer and higher uncertainty” will likely cause more companies to delay investments and hiring. This could slow economic momentum even further. Even though Fink reassured that this isn’t another 2008-style financial crisis, the anxiety around the economy’s direction is creating tension among BlackRock’s clients.
Recessions Can Be Bullish for Crypto
So how does this affect crypto? Interestingly, this incoming US recession might not be bad news for everyone, especially crypto investors. Historically speaking, recessions often trigger a shift in monetary policy.
The Federal Reserve typically lowers its interest rates to stimulate the economy during these downturns. Lower rates make borrowing more attractive, and can result in more liquidity entering financial systems (including crypto). Investors also tend to develop an appetite for risk assets during times like these, in a possibly bullish scenario for the market.
History also shows that rate cuts and quantitative easing can contribute to bull runs in the crypto market. Investors searching for profit tend to turn to high-growth assets like Bitcoin and Ethereum when stocks and bonds start to underperform. Fresh economic data also contributes to this narrative.
For example, the U.S. Bureau of Labor Statistics recently released the Producer Price Index (PPI) for March. This PPI showed a surprising 0.4% drop from the previous month, as opposed to economist expectations of a 0.2% rise.
On a yearly basis, PPI inflation came in at 2.7%, which is well below the expected 3.3%. These reports show that inflation is currently easing, and the Federal Reserve will likely cut interest rates without fear of overheating the economy. This is music to the ears of crypto users, as Bitcoin has a fresh new chance of challenging the $100,000 price level once again.
