The International Monetary Fund (IMF) recently published a stark prediction that the unprecedented global economic slowdown triggered by this “great lockdown” will eventually get much worse before it gets better. From an economic standpoint, IMF warns that this is the worst market downturn in 90 years, which is why Bitcoin needs to break away from the S&P 500 index in the cryptonews, if it wants to prove that it has any chance of producing the highly anticipated post-halving bull run.
On April 14, the IMF published the quarterly World Economic Outlook report, describing the COVID-19 induced lockdown as the worst economic downturn and predicting a total of nine trillion dollars of losses by 2022.
IMF warns that this is a major downturn and the report’s growth estimate shows that the economy has fallen by 6.3% since January, predicting a year-over-year recession of 3% as the economic activity retraces in more than 170 nations.
The Director of the Research at IMF, Gita Gopinath, talked about the prediction and said that it was based on the assumption that “the pandemic and required containment peaks in the second quarter for most countries in the world, and recedes in the second half of this year” and said that the growth forecast was a “major revision over a very short period.”
“This makes the Great Lockdown the worst recession since the Great Depression, and far worse than the Global Financial Crisis,” Gopinath noted.
As we can see from the past, the 2008 financial crisis saw a 0.1% global retraction in growth 12 months from its outset. However, the current crisis has an immediate impact on China and India. So, the IMF is more optimistic about 2021, predicting a 5.6% global recovery.
As the IMF warns of a downturn, we can see that their outlook for the global economy may comprise a negative omen for the Bitcoin and cryptocurrency markets. The Bitcoin news lately showed that BTC was correlated to the S&P 500. While it is unknown how traditional markets will react if the crisis deepens, the history of major financial crises suggests that they have further to fall.
In addition to this, data published on April 14 by Coinmetrics shows that the mid-March market turmoil saw Bitcoin in record correlations with the traditional markets. Currently, however, BTC is below $7,000 without a chance to breach higher.
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