According to the most recent Charles Schwab Trader Sentiment Survey, 90% of traders believe that a US economic recession is highly likely, with 74% of them convinced that it will start this year.
As per the survey, 18% of traders are now most worried about the possibility of a recession, an increase of 6% from the previous quarter. That makes around 63% of the responding traders especially negative on cryptocurrency and meme stocks.
Crypto trader sentiments hit as technical recession expected
The survey also revealed that few traders intend to purchase cryptocurrencies, but they only include non-first-time investors and experienced buyers.
Meanwhile, a sizable majority (69%) believe that a recession would last a year or less, and only one in five people are withdrawing funds from the stock market to protect themselves against a market decline. Here, it is noteworthy that while the correlation between stocks and crypto has been highest this year, data report from research firm Kaiko underlined that Bitcoin’s rolling correlation with bonds and the Nasdaq fell to its lowest level in three months, indicating that the cryptocurrency market is drifting from conventional assets.
Barry Metzger, Head of Trading and Education at Charles Schwab said, “The good news is that across generations, traders are confident in their ability to navigate challenging markets, which speaks to their mindset, but also the level of access they have to exceptional tools, resources and education to help them develop trading strategies and make decisions.”
That said, inflation is still the traders’ top money and investment concern (21%), with almost 79% of them expecting a decline in that front by the end of 2023. The majority of traders also believe that the Fed will gradually slow down the interest rate hikes over the course of the rest of the year.
Especially when the Consumer Price Index (CPI) data for July showed a lower-than-expected 8.5% headline price increase year-on-year.
Bitcoin’s performance as an inflation hedge
Moya stated, “I think for the rest of the summer, yes, inflation data [and] Fed-speak will dictate where Bitcoin goes. Bitcoin is still heavily correlated with equities right now, especially the Nasdaq,” he notes. “And this inflation report has given a lot of hope to the idea that the Fed won’t need to be as aggressive with tightening policy going forward.”
Previously, Be[In]Crypto had also quoted Swan Bitcoin’s managing director Steven Lubka, who said that Bitcoin is an inflationary hedge, but only in certain circumstances. Lubka claims that while some sources of inflationary pressure, like quantitative easing, are well-protected against by Bitcoin, others, like supply chain disruption, are less so.
At press time, BTC is maintaining a 24-hour range between $23,559.63 and $24,931.30, up almost 2% in the last one day, compilation by CoinGecko shows.