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Following President Donald Trump’s “Liberation Day” tariff announcement on April 2, recession probabilities have spiked across leading economic trackers, putting Bitcoin on high alert. Kalshi’s prediction markets now stand at 53%, an 8.1% jump from prior estimates, and Polymarket’s odds have surged to 54%.
Tariff Shock And Rising Recession Odds
After President Trump’s latest move to impose higher duties—“Liberation Day” tariffs targeting key US trading partners, including a 34% levy on imports from China and 20% on those from the European Union—multiple forecasters revised their recession probabilities upward.
The odds have been updated across several respected institutions and platforms: Besides Kalshi and Polymarket, Larry Summers has indicated a 50% likelihood, whereas JPMorgan puts the chance at 40%. According to a CNBC Fed Survey, the odds are 36%, with both Moody’s Analytics and Pimco forecasting a 35% chance. Notably, Goldman Sachs has significantly revised its stance, now estimating the probability at 35%, up from a previous 20%.
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JPMorgan warns that these tariffs could result in “a $660 billion annual tax increase on Americans,” potentially adding 2% to domestic inflation. The risk of a knock-on effect is underscored by shifting consumer confidence data and the looming prospect of retaliatory trade measures from partners such as Canada and the EU.
Goldman Sachs, in its March 30 research note, offered a sobering outlook for 2025. According to the team: “We now see a 12-month recession probability of 35%. The upgrade from our previous 20% estimate reflects our lower growth baseline, the sharp recent deterioration in household and business confidence, and statements from White House officials indicating greater willingness to tolerate near-term economic weakness in pursuit of their policies.”
What This Means For Bitcoin
Renowned crypto trader Bob Loukas captured market sentiment on X, writing: “I’m starting to think we’re heading into a recession or bear market, maybe a milder one, but it’s looking likely. […] We should take it seriously. That said, I think it’s time to move away from the ‘buy the dip’ habit we’ve leaned on during the bull market. […] It might not end up being a disaster, but focusing too much on potential gains could mean overlooking real risks. […] Bonds seem like a good bet, capital has to flow somewhere.”
With respect to Bitcoin, Loukas underlines the difficult situation for investor with respect to Trump’s pro-BTC policy: Bitcoin’s tricky, instinct says it struggles, but I can see it holding up as a kind of digital gold, especially since the administration seems to want it to succeed, outside of trade policy stuff. Maybe there is some bias in that last statement.”
Aksel Kibar (@TechCharts), a Chartered Market Technician and ex-fund manager, briefly affirmed Loukas’s stance by commenting, “Agreed.”
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Meanwhile, LondonCryptoClub (@LDNCryptoClub) spotlighted new guidance from UBS global wealth management, which now expects the Federal Reserve to cut rates by 75–100 bps through the remainder of 2025.
The analyst writes via X: “This is kind of the key for Bitcoin. If the Fed treats tariff induced inflation as ‘transitory’ [… ] and focuses on supporting growth, then real rates are coming way lower […] and Bitcoin will fly. Financial conditions are currently easing with lower dollar and yields (although keep an eye on credit spreads). […] Bitcoin front runs liquidity […] Ultimately, this all ends with the Fed being forced to be the liquidity providers of last resort […] Bitcoin will end this year significantly higher. Just the path is going to be a very volatile and choppy one.”
Macro analyst Alex Krüger (@krugermacro) cautioned about the interplay between monetary easing and recession risk: “Fed cuts without recession are usually bullish. Fed cuts with recession are usually bearish. This was a major talking point in 2024.”
Powell’s Speech: A Pivotal Moment
In light of President Trump’s unexpected tariffs, Friday’s scheduled remarks by Federal Reserve Chair Jerome Powell have taken on renewed urgency. Powell had previously indicated that monetary policy remains restrictive, given inflation’s persistence above the Fed’s 2% target. Yet tariffs introduce a potential double bind: higher costs for consumers that could drive inflation further, alongside a drag on economic growth that complicates the labor market outlook.
Andy Brenner of NatAlliance Securities described the speech as possibly “One of the most important Powell speeches in three years.” The Fed Chair is due to speak at 11:25 am ET.
At press time, BTC traded at $83,197.
Featured image created with DALL.E, chart from TradingView.com
