Strong GDP Numbers May Be Bearish for Crypto – Here’s Why

The Fed is expected to continue raising interest rates, although at a slower pace, delaying the shift in policy traders have been eyeing

article-image

FOTOGRIN/Shutterstock.com modified by Blockworks

share

Crypto and equities markets whipsawed during Thursday’s session as traders leaned more risk-off and speculated what strong GDP numbers might mean for interest rates going forward. 

Preliminary data shows economic growth remained stable during the last quarter of 2022, beating expectations and posting only a moderate decline from the previous period.

The US Commerce Department just reported initial gross domestic product (GDP) numbers, which showed a 2.9% annual rate of economic growth, adjusted for inflation. Several revisions to the data are expected in the coming months. 

The Federal Reserve is expected to continue raising interest rates, although at a slower pace, delaying the shift in policy traders have been eyeing. As of Thursday afternoon in New York, markets were pricing in a 99% chance of a 25 basis point increase next month. 

“The market’s obsession with rates and inflation, and their implications for the dollar, leads me to believe that this ultimately ends up bearish for asset prices,” Darius Tabatabai, CEO of decentralized exchange Vertex Protocol, told Blockworks. “A strong GDP print will serve as a warning around potential inflation risks, and most likely embolden hawks on the FOMC.”

Tom Siomades, chief investment officer of AE Wealth Management, agreed, noting that continued lagging unemployment is not helping the case for the Fed to pause interest rate increases anytime soon. The trend means investors will be more likely to allocate to safer investments, he added. 

“Expect fixed income, quality and dividend paying stocks to do well as this tug of war between when the Fed stops and how high it may raise rates continues for the next few months,” Siomades said. 

Downward trend for crypto still on the cards

Markets traded mixed on the GDP news, with the S&P 500 and Nasdaq Composite indexes initially falling before rallying around 0.5% and 1%, respectively, later in the session. 

Bitcoin remained mostly flat, trading about 0.2% lower Thursday afternoon in New York, while ether lost around 1%. A downward trend for cryptos would not be surprising, analysts said. 

“Given recent price action, we could see some reversal in the movements of the last few weeks — which would likely lead to crypto prices heading lower,” Tabatabai said. 

“Indeed, this is already happening, and I’d expect rate sentiment to be hawkish for longer than the market expects; especially with the FOMC likely to favor inflation fears over recessionary concerns.”


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research

article-image

While Arizona’s governor could veto another crypto reserve bill, similar North Carolina and Texas laws are approaching the finish line

article-image

However, they noted there’s now an increased risk that unemployment and inflation will rise in the coming months. 

article-image

The network’s most ambitious upgrade since the Merge brings validator streamlining, smart account UX and doubled blobspace to Ethereum

article-image

Debate over extra Bitcoin use cases has returned, two years on from Ordinals

article-image

Altcoin season may be on a permanent pause as the market matures and paths grow more selective

article-image

Today’s blockchains are more like nervous systems without a brain — wiring without will