Market Volatility Increases as JPMorgan Raises Recession Probability to 40%

Financial markets have experienced increased volatility following JPMorgan’s decision to raise the probability of a U.S. recession to 40%, up from 30% at the start of the year. This adjustment has had a cascading effect on global equities, with indices such as the S&P 500 and Nasdaq experiencing declines. The cryptocurrency market has mirrored these movements, with Bitcoin and other digital assets facing heightened sell-offs amid broader macroeconomic concerns.

Goldman Sachs has also revised its recession probability, increasing it from 15% to 20%, with analysts indicating that further upward adjustments may be necessary should economic policy uncertainties persist. This sentiment has driven risk-averse behaviour among investors, leading to capital outflows from high-volatility assets, including cryptocurrencies.

Historically, Bitcoin and the broader crypto market have been categorized as risk assets, exhibiting strong correlations with equity markets during periods of economic uncertainty. As recession fears mount, institutional investors may shift their capital toward traditional safe-haven assets, such as gold and U.S. Treasury bonds, at the expense of cryptocurrencies.

Despite prevailing bearish sentiment, some market participants view the current downturn as an opportunity to accumulate digital assets at lower valuations. Analysts argue that while macroeconomic challenges persist, Bitcoin’s long-term value proposition as a decentralized store of value remains intact. The Federal Reserve’s monetary policy decisions in the coming months will play a crucial role in determining whether risk assets, including cryptocurrencies, can regain upward momentum.

Investors remain cautious as they navigate an increasingly complex financial landscape, weighing short-term economic risks against long-term investment strategies.