By George Ward
The World Economic Forum’s top economists anticipate a bleak macroeconomic picture and a worldwide recession in 2023. The crypto market has been soaring this year, but a persistently gloomy outlook in the global economy might break those winds.
According to a recent WEF study, the International Monetary Fund (IMF) predicts that in 2023, almost one-third of the global economy will experience a recession.
“Global recession risk is likely, as positive economic prospects worldwide remain bleak.”
The survey predicts that businesses will experience a “triple challenge” at the beginning of 2023. These challenges include high costs for essential supplies, tighter monetary policy, and declining demand for assets would hamper any economic recovery.
Leading economists also point to talent unavailability, personnel shortages, and significant cost-cutting measures as contributing issues. Consequently, the retail consumer at the bottom of the heap is affected by this in some way.
World Economies And Crypto Markets
Additionally, at roughly 2.3%, the US savings rate is at its lowest point ever. This indicator is used to quantify how much a person sets aside for investing out of their disposable income.
This might significantly affect cryptocurrency assets, which are typically thought of as high-risk. Investors in risky assets like cryptocurrency will reduce if there is less available disposable money.
As increased costs put more strain on wallets and only the rich can afford to indulge in investing in crypto assets, a recession is likely to have an even more significant influence on their capability to make such risky investments.
Hence, the WEF study predicts that it is doubtful that the cryptocurrency market will fully recover in 2023, and consolidation may persist until 2024. The world economy will recover once inflation is under control and living expenses decline.
Once that happens, the retail sector will have enough floating money to invest in crypto assets later. Nevertheless, the WEF stated in research released earlier this month that cryptocurrency was here to stay.
Despite the crypto markets’ uptrend this year, economists warn that this surge might be a bull trap. Today, there was a modest decline, with the overall market evaluation falling to $1.03 trillion.
Since the start of the year, the markets have increased by 24%. However, this rally may fade out because there is often a Chinese New Year.
Today, the two leading cryptocurrencies (BTC and ETH) recorded some slight losses, while the minor cryptocurrencies followed a similar trend.