Macquarie: Slower U.S. Economy Could Boost Crypto Prices

Concerns about a slowing U.S. economy have cast a shadow over risk assets, but further weakness could bring about lower rates, pushing crypto prices higher, according to Macquarie.

Analysts from Macquarie suggested that crypto assets are well-suited for volatile macroeconomic conditions. They noted that any concerns around a slower U.S. economy could drive interest rates lower, which would be supportive of crypto prices. This perspective is based on the idea that during economic uncertainty, investors may turn to alternative assets like cryptocurrencies as a hedge against traditional market volatility.

The bank’s analysis comes as Bitcoin miners under its coverage mostly delivered better-than-expected results for the fourth quarter of 2024, buoyed by Bitcoin’s strength during that period. Several miners who had previously identified AI as an expansion opportunity are now progressing or accelerating their operations in this area.

Despite the recent weakness in bitcoin prices, the analysts remain optimistic about the sector’s outlook, maintaining their outperform ratings across its miners under coverage. They highlighted that cost discipline and progress being made by those focused on the high-performance computing (HPC) and AI adjacency are continuing to support the outlook for these players.

The economic outlook remains a focal point for investors, with the Fed's signals about the economy being closely watched. The Fed's decision to keep rates unchanged, coupled with signals that rate cuts might be on the horizon if economic indicators continue to weaken, could further bolster this trend.

The cryptocurrency market, in particular, has been volatile in recent times. The overall market sentiment towards cryptocurrencies is influenced by a variety of factors, including regulatory developments, technological advancements, and macroeconomic conditions.

The Fed's decision to hold rates steady, while signaling potential cuts in the future, adds another layer of complexity to the economic landscape. Investors are closely monitoring these developments, as they could have far-reaching implications for asset prices, including those of cryptocurrencies.

In summary, the Fed's decision to maintain interest rates and its signals about the economy have significant implications for the cryptocurrency market. Macquarie's perspective that a slower U.S. economy could support crypto prices highlights the potential for alternative assets to gain traction during times of economic uncertainty. As the economic outlook remains a key focus for investors, the Fed's signals about the economy will continue to shape market sentiment and asset prices.