Economists Predict Recession. Should Crypto Holders Worry?

The New York Fed forecasts a 38% chance of a recession within the next year, which history shows is an almost certain indicator the economy will slow down

article-image

Morrowind/Shutterstock.com

share

If the US economy is headed into a recession, risk assets such as crypto and tech equities should buckle up, analysts say. 

The New York Federal Reserve’s recession probability model is now predicting a 38% chance that the US will go into a recession in the next 12 months. 

“This understates the real probability which, based on +60 years of history, is now close to 100%,” Nicolas Colas, co-founder of DataTrek Research, said. 

The New York Fed uses the difference between 3-month and 10-year Treasury yields to determine their figure. Historically, nearly every single time the New York Fed’s model has called for a chance of recession above 30%, a recession was either already underway or occurred within 12 months, Colas noted. 

“The economy is entering slowdown mode as final third quarter nonfarm productivity data was revised higher and labor costs were significantly revised lower,” Edward Moya, senior market analyst at Oanda, said. “Yield curve inversion deepens and nears a four-decade low which is clearly setting up this economy for a recession that won’t be a mild one.”

With risk appetite fading, bitcoin and ether continued to trend lower Wednesday, each losing about 1.6% and 3%, respectively. Bitcoin continued to hover below $17,000. 

Equities struggled to stay in the green Wednesday as well with the S&P 500 and Nasdaq composite indexes losing 0.2% and 0.5%, respectively. 

“Bitcoin has massive resistance at the $17,500 level and that should hold leading up to next week’s FOMC decision,” Moya said. “Long-term crypto bets that are waiting to be placed will require either a bullish fundamental trigger or a capitulation moment that has bitcoin testing a key technical level.” 

The Fed is set to release its latest decision next week, and investors will surely want to know how Chair Jerome Powell is thinking about rates in view of a potential economic slowdown. 

As of Wednesday, futures markets were pricing in about a 75% probability that the Fed will opt for a 50 basis point rate hike, which would be a mild decrease from its streak of 75 basis point increases, according to data from CME Group.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates (1).png

Research

Aave’s revenues have doubled from April lows and are fast approaching all-time highs. With 35% of borrow interest coming from ETH and 55% from stablecoins, Aave is emerging as a powerful proxy as an ETH and stablecoin beta. As looping strategies accelerate growth and Horizon positions the protocol to ride the RWA wave, Aave is shaping up as one of DeFi’s most compelling multi-narrative plays.

article-image

Private testnet aims to deliver low-cost settlement with partners including Visa, Deutsche Bank, and OpenAI

by Blockworks /
article-image

Solana saw $78 million in REV for August

article-image

Lit Protocol’s Vincent is shifting agentic finance from toy demos to production rails

article-image

The new system aims to unify Europe’s fragmented tokenized asset settlement and cut cross-border costs

by Blockworks /
article-image

Tron slashed fees by 60% as Plasma looms, threatening its USDT moat

article-image

The acquisition adds evaluation-based funding to Kraken Pro, giving traders access to capital on performance

by Blockworks /