While cryptocurrencies are in an accumulation phase in the lower part of the sustained range from the highs hit last October, the US economy added around half a million jobs in March, according to this source. The Dow Jones estimates the industry average at about 6% from its all-time high. Additionally, it is estimated that the country’s households have saved an additional $2.5 billion during the months of the pandemic. What seems like good news, however, comes amid recessionary sentiment on Wall Street. What is the reason for the pessimism of some experts?
There are several reasons that lead to a global economic recession. On the one hand, many countries – and their respective economies – had not recovered previous recession in 2008 when the real estate bubble burst Covid19 pandemic. Since then, aid has been approved and there is a cooperative environment in countries in the euro zone, for example, to keep the economy afloat, but it can’t stay like this forever. And in this context a war has begun.
Russia’s invasion of Ukraine may seem like a regional affair, affecting only Eastern Europe, but the ramifications are stretching across the world. It turns out that after the cut in supply of Ukrainian exports Fuel prices have skyrocketed in European countries, but so have the shortages of certain products, such as fertilizers in Peru. And it is that in the global economy we live in, cutting routes with great activity due to the rise in commodity prices can cause disruption on the other side of the world; This is currently happening in Peru, among other complications.
For his part, Gary Pzegeo, Director of Fixed Income at CIBC, has explained this from his perspective the market would already be signaling signs of a possible recession in the form of the inversion of the yield curve that took place after the conflict began.
How is all of this affecting us? On the one hand yes are several high-level investors and even former employees of the Federal Reserve of the US indicating that the economy may encounter a great recession in 2023. As the experts say, history tends to repeat itself and Lawrence Summers, former Treasury Secretary, explains this by the fact that “Over the past 75 years, whenever inflation fell above 4% and unemployment fell below 5%, the US economy ended up in recession in less than two yearsâ€ .Â
What can we do against it? For the beginning, It’s not like there’s a magic recipe to get out of this situation this goes far beyond local problems. However, one possible way to avoid asset devaluation is to swap them for others that don’t suffer the same devaluation, i.e. switch from fiat to crypto assets like Bitcoin or Ethereum. In addition, value can also be obtained with the decentralized products (deposits, staking, etc.) offered by DeFi.
Although the road is not easy, given the possibility that another major recession is looming, we can take preventive measures. Financial education is strongly recommended in order to make appropriate decisions about the use of our assets..
Disclaimer: The information and/or opinions expressed in this article do not necessarily reflect the views or editorial line of Cointelegraph. The information contained herein should not be construed as financial advice or investment recommendation. All investment and trading movements involve risk and it is the responsibility of each person to conduct their proper research before making any investment decision.
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