The post US Economy on Brink: Zeberg Predicts Major Downturn and Crypto Market Fallout appeared first on Coinpedia Fintech News
Macroeconomist Henrik Zeberg has issued a stark warning about a potential severe recession in the US within the next two years. Using historical data and market indicators, Zerberg suggests that the forthcoming downturn could be the worst since the Great Depression of 1929.
Warning Signs from Market Indicators
In a recent post on the X platform, Zeberg highlighted a Piper Sandler Recession Indicator chart comparing two-year Treasury yields with the Federal Funds Rate. The chart reveals historical patterns where shifts in market yields preceded actions by the Federal Reserve, often signalling economic declines. Currently, inflation stands at 3.4%, echoing concerning levels from the past.
Bearish Market Structures
The chart also emphasises the Relative Strength Index, which measures momentum in price movements. Historically, large bearish structures in the RSI have preceded significant market crashes. The current ‘Mega Bearish Structure’ indicates a similar impending decline, raising alarms about future economic stability.
Speculation of Market Dynamics
Recent months have seen increased speculation about a potential recession as several economic indicators turn red. Generally, declining treasury yields raise investor demand for safe-haven assets amid economic uncertainty. The trend suggests growing concerns about an impending market downturn.
Projections of a Blow-Off Top
There is speculation about a potential blow-off top in US equities and cryptocurrencies, suggesting an unsustainable surge in asset prices before an abrupt decline. This scenario typically involves rapid price increases driven by speculative buying, often leading to significant market corrections.
Investment research platform Game of Trades has highlighted the predictive ability of the 10-year/3-month US Treasury curve, suggesting that a recession is likely to hit in the latter half of 2024. As large-cap companies lead the recent market rally and the cryptocurrency market consolidates, concerns about the timing and impact of a potential recession continue to grow.