Research Shows 63% Of Traders Are Bearish On Crypto With The Possibility Of An Impending Recession

According to Charles Schwab’s latest Trader Sentiment Survey, 90% of traders believe a US economic recession is very likely, with 74% believing it will start later this year.

According to the survey, 18% of traders are now most concerned about the possibility of a recession, up 6% from the previous quarter. That makes around 63% of responding traders particularly negative towards cryptocurrencies and meme stocks.

Crypto trader sentiment kicked in as a technical recession was expected

The survey also revealed that few traders intend to buy cryptocurrencies, but they only include non-first-time investors and experienced buyers.

A sizeable majority (69%) now believe a recession would last a year or less, and only one in five withdraw funds from the stock market to protect against a market downturn. It’s worth noting here that even though the correlation between stocks and crypto has been at its highest this year, research firm Kaiko’s data report underscored that Bitcoin’s ongoing correlation with bonds and the Nasdaq has fallen to its lowest level in three months, suggesting suggesting that the cryptocurrency market is drifting away from conventional assets.

Barry Metzger, Head of Trading and Education at Charles Schwab, said: “The good news is that generations of traders have confidence in their ability to navigate challenging markets, which speaks to their mindset, but also the approach they have they have exceptional tools, resources and education to help them develop trading strategies and make decisions.”

However, inflation is still traders’ top money and investment concern (21%), with almost 79% of them expecting a fall on this front by the end of 2023. The majority of traders also believe that the Fed will gradually ease rate hikes later in the year.

Especially as the Consumer Price Index (CPI) data for July showed a lower-than-expected headline price increase of 8.5% yoy.

Bitcoin’s performance as an inflation hedge

Edward Moya, senior market analyst at Oanda, told Fortune that the inflation trend could be positive for Bitcoin.

Moya explained: “I think for the rest of the summer, yeah, inflation data [and] Fed talk will dictate where bitcoin goes. Bitcoin is currently still highly correlated with stocks, particularly the Nasdaq,” he notes. “And that inflation report has given a lot of hope to the idea that the Fed doesn’t need to be as aggressive in tightening policy going forward.”

Before, Sei[In]Crypto had also quoted Swan Bitcoin CEO Steven Lubka as saying Bitcoin is an inflation hedge, but only under certain circumstances. Lubka claims that some sources of inflationary pressures, like quantitative easing, are well protected by Bitcoin, while others, like supply chain disruption, are less protected.

At press time, BTC is maintaining a 24-hour range between $23,559.63 and $24,931.30, up nearly 2% over the past day, a compilation by CoinGecko shows.