Fidelity Investments’ global macro director, Jurrien Timmer, believes that a recession could lead to a significant rally for Bitcoin. Timmer states that for Bitcoin to experience substantial gains, current high-interest rates need to decline. He presents a regression model that predicts a price band for Bitcoin based on the adoption rate curve and a range of real interest rates. According to the model, if interest rates decrease, Bitcoin could reach a high of $96,210 by the end of 2025. Timmer also suggests that during a recession, investors may view Bitcoin as a safe haven investment, driving its price higher.
Timmer’s chart indicates that Bitcoin’s upward movement may only reach the $45,616 level by the end of 2025. However, if interest rates decrease, the chart suggests the possibility of a high of $96,210. He believes that in a recession, the Federal Reserve would pivot, causing investors to seek safe haven investments like Bitcoin and gold, which could elevate their prices. Timmer also highlights the decreased correlation between Bitcoin and equities, suggesting that it could provide uncorrelated returns in the next market cycle. However, for Bitcoin to reach new all-time highs, the Federal Reserve would need to inject more liquidity into the markets, similar to what was done during the Covid-19 pandemic.
At the time of writing, Bitcoin is trading at $26,931, experiencing a 0.5% decline in the last 24 hours.