As macroeconomic fears mount, bitcoin faces another test

As economic uncertainty increases in traditional financial markets, the intersection of cryptocurrency and traditional finance is becoming more important than ever.

Roundtable host Rob Nelson recently led a discussion at Market Rebellion with Co-Founder Jon Najarian and Founder and CEO of Gokhshtein Media David Gokhshtein, examining this dynamic. Najarian highlighted the role of the Federal Reserve and potential warning signs of a recession, while Gokhshtein emphasized bitcoin’s historic role as a hedge against financial instability. But recently, that role appears to be breaking down.

Nelson began the conversation by quizzing Najarian on the potential merger between traditional finance and crypto markets. This year, bitcoin has generally sold off alongside stocks whenever there’s buzz in the market. Perhaps that shouldn’t be surprising, as Wall Street giants are embracing bitcoin via ETFs.

Najarian noted that the Federal Reserve’s transparency has evolved, with members more vocal than in the past. But that has not allayed fears of a recession, especially with the yield curve inversion — usually a precursor to a recession. “The panic now is that when we see a two-year to 10-year inversion … that should be a sign that a recession is likely,” Najarian said.

He also highlighted the current market jitters, particularly with the 10-year Treasury yield falling below 3.7%, signaling a possible recession. Najarian believes the lower the yield, the better it could be for bitcoin, as investors could seek refuge in digital assets amid waning confidence in traditional markets.

Nelson then shifted the discussion to whether the U.S. was actually heading for a recession. Najarian expressed uncertainty but emphasized that any downturn might not be directly caused by the Fed. Instead, he argued that the prolonged yield curve inversion indicated deep-rooted concerns about the economy, concerns that were only now beginning to get the attention they deserved.

Turning to Gokhshtein, Nelson explored the idea that bitcoin is a hedge against traditional financial turmoil. Gokhshtein echoed the thesis of prominent investor Cathie Wood: that investors should consider bitcoin as a portfolio hedge, especially if economic conditions worsen. As traditional markets become more volatile, the role of digital assets like bitcoin could become increasingly attractive, she argued.