According to a recent analysis by Markus Thielen, Managing Director at 10x Research, the current Bitcoin market sentiment may be overly optimistic in light of potential economic downturns. Thielen highlighted that the widening credit spreads are indicative of deeper economic concerns, suggesting that fears of a recession are increasingly relevant. While it is true that historically, recessions often lead to monetary easing and could benefit Bitcoin in the long run, he warns that the cryptocurrency may encounter significant hurdles in the short term.
Moreover, Bitcoin traditionally sees downward pressure when the Chinese yuan depreciates or when the Federal Reserve implements rate cuts. This is because initial economic measures often fail to stimulate immediate market confidence, affirming prevailing sentiments of economic weakness. Historically, as the credit spread widens over the years, we observe Bitcoin succumbing to greater selling pressure, indicating the need for a longer recovery period before any sustainable bullish trend can materialize.