From StormGain they share recommendations to take precautions in the investments of cryptocurrency users in the face of a possible recession
A recent report prepared by the international financial agency “Fitch Ratings” he speculates that both the United States and Europe will see a 0.1% contraction in their economies. This is due to the natural gas crisis and will take place during 2023.
It is understood as recession to a decrease in economic activity for a period of time, for at least 2 consecutive quarters negative in the rates of change of GDP (Gross Domestic Product). It is a measurement that studies the increases or decreases experienced by the production of an economy in certain periods of time.
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According to the latest reports, there is a 40% chance that the US will experience a recession next year, because gross domestic product is estimated to slow to near zero during the second half of next year. This could cause the Federal Reserve (FED) to approve a greater increase in interest rates, which means higher inflation.
Against this, the price of relatively fixed supply currencies (such as Bitcoin) fluctuates according to demand. But if, due to the recession, interest rates fall, then there will be more cash flows in the economy and consumers and investors will have more money to spend and invest, so, we could be facing a crypto market with greater liquidity and upward movements.
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Emanuel Juárez, expert cryptocurrency analyst at StormGain, gives some recommendations to take precautions in the investments of cryptocurrency users:
Be alert to macroeconomic datasince an increase in the inflation indicator will pressure the Fed to be aggressive in raising rates to control it, which would bring about a cooling of the economy.
A cooling of the economy in the coming months is a good opportunity to look for sales on platforms that allow short positions.
Before any rebound in the markets, wait for confirmations of trends why a bullish path is more unlikely at the moment.
If we see signs of economic recovery, keep an eye on the reference index (S&P 500 market and Dollar Index and Bitcoin), since they generally lead the movements and trends.
Identify strong stocks and cryptocurrencies under the criterion that when the reference rises, they rise in the same way, but when it falls, they resist the fall better.
Weak stocks and crypto rise less than the benchmark and fall more when the trend is down.
In addition, in these cases, a cryptocurrency trading signal service will be the tool to consult for economists and investors. This tool offered by some brokers emits two main indicators (profitability and probability) and guides the user to make the best decision in each context.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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