IMF predicts gloomy outlook for crypto

  • The IMF predicts a gloomy outlook for crypto due to a slowdown in economic growth.
  • Earnings reports from the biggest tech companies and US gross domestic product data are coming soon, which could cause jitters.
  • Investors are already fleeing to Fiat and preparing for the worst.

Investors are warning of further volatility in digital asset markets as the International Monetary Fund (IMF) predicts a slowdown in global economic growth.

In its latest report from July on the outlook for the global economy, the International Monetary Fund predicts that inflation will be higher than expected and that, together with the slowdown in global production, this is a sign of lower economic growth in the future. The report states, in short, that the economy is likely to slow down.

“The outlook is predominantly negative.”

Macro factors have been linked to the crypto bear market. Crypto analyst Miles Deutscher then warned about the volatility in the markets on Twitter.

He explained that the earnings reports from Microsoft, Google, Apple and Meta, as well as the gross domestic product (GDP) figures of the United States, which will be released soon, could cause further unrest.

Crypto investors are also expecting a rise in US interest rates this week. The U.S. central bank is expected to raise interest rates by as much as 75 basis points, or 0.75 percent, to 2.25 percent to further tighten monetary policy and curb inflation, Bloomberg reported on Tuesday.

Industry observers also expect the US to officially be in recession when second-quarter gross domestic product figures are released on July 28. On Investopedia, a recession is when gross domestic product growth is negative for two consecutive quarters.

Crypto YouTuber DustyBC tweeted on Tuesday that the global slowdown and potentially lower US gross domestic product could explain why the bitcoin (BTC) price has fallen below $21,000.

In the meantime asked Brent Xu, founder of Cosmos-based cross-chain DeFi hub Umee, tweeted on Monday: “Is a macro recession = a crypto recession?”

Material Indicators tweeted on Monday that there was “no guarantee that any support would hold” when the GDP and interest rate figures were released. It also said there could be volatility for a few days.

Elizabeth Gail wrote on Tuesday that Bitcoin markets are likely to bounce back once uncertainty about the current state of the economy and geopolitical tensions are resolved. But no one knows how long it might take.

The IMF explained that the sell-off in cryptocurrencies since May has had little impact on other financial systems due to liquidations, bankruptcies and losses at major companies such as Celsius, Three Arrows Capital and Voyager Digital Holdings.

This suggests that while the financial system has a massive impact on crypto, the reverse is not the case.

“Crypto assets have experienced a dramatic selloff, leading to large losses in crypto investment instruments and the collapse of algorithmic stablecoins and crypto hedge funds. But this has had little impact on the financial system.”

At press time, the total market capitalization of all cryptocurrencies is just over $1 trillion, according to the TCAP Index.

Cointelegraph previously reported that investors are fleeing fiat currencies and preparing for the worst.

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