Renowned macroeconomist Henrik Zeberg has set the financial world abuzz with a stark prognosis on X (formerly Twitter), forecasting a dramatic surge in the Bitcoin price to a peak of $115,000 to $150,000. However, this meteoric rise is predicted to find an abrupt end, caused by a devastating macroeconomic downturn, one that Zeberg anticipates will be the most severe since the 1929 crash.
Why A Recession Will Hit The US In 2024/2025
At the core of Zeberg’s argument are seven reasons. Zeberg asserts, “Our Business Cycle has flashed a recession signal in 2023. Leading Indicators have crashed under our Equilibrium Line. In 80 years of data, the recession Signal from our Model has NEVER been wrong. No false signals – ever!” This model, with its unwavering accuracy over eight decades, forms the bedrock of his grim forecast.
Zeberg also delves into the significance of yield inversion, a well-documented precursor to economic downturns. Despite the signal’s dismissal by analysts in 2023 due to impatience, Zeberg emphasizes its historical reliability, noting, “From the bottom of the Yield Inversion, we normally see 12-15 months before a recession sets in. This signal is very much alive!” His remarks underscore a widespread underestimation of this critical indicator.
The economist further examines the trajectory of US industrial production, drawing alarming parallels to the period just before the 2007-08 financial crisis. He observes a similar pattern of divergence and warns of a strong impending drop in industrial production, signaling the onset of a recession.
Zeberg’s analysis extends to the housing market, where he highlights the plummeting NAHB index as a significant warning sign. “The bigger the decline in NAHB – the larger the rise in Unemployment,” he states, pointing to the direct relationship between housing market distress and the broader economy. This situation is exacerbated by rising interest rates, which lead to reduced consumer spending and, consequently, an economic downturn.
Moreover, personal interest payments are another cornerstone of Zeberg’s argument. He notes the historical pattern where increases in market rates burden consumers with higher mortgage and debt payments, ultimately leading to recessions. “Every rise in rates over the years has caused a recession, as consumers need to pull back on their Consumption,” Zeberg cautions, highlighting the lag inherent in the economic business cycle.
Housing affordability, or the lack thereof, is also a critical component of his analysis. With affordability plummeting below levels seen before the financial crisis, Zeberg paints a grim picture of the near future, where a deteriorating unemployment situation could lead to widespread defaults and a housing market collapse.
Lastly, Zeberg points to the bloated inventory levels of retailers and companies worldwide. He describes this as a hangover from the demand hype of 2021-22, driven by stimulus funds that have since dried up. This mismatch between supply and anticipated demand, he suggests, is a ticking time bomb for the economy.
Bitcoin: A Mirage Before The Storm
In the midst of this dire economic forecast, Zeberg casts a unique spotlight on Bitcoin. He predicts a fleeting period of euphoria for the cryptocurrency, with its value skyrocketing to an all-time high, potentially reaching between $115,000 and $150,000. He also provocatively states, “@Peter Schiff: See you at BTC = 100X 1 ounce of Gold.”
See you at BTC = 100X 1 ounce of Gold
— Henrik Zeberg (@HenrikZeberg) January 17, 2024
However, Zeberg cautions that this surge is part of a broader misleading narrative. “The Soft Landing Narrative is what will dominate into the top in #Equities #Crypto #BTC,” he elaborates. This narrative, according to him, is a mirage that will mislead economists and analysts as they try to rationalize the ‘blow off top,’ a phenomenon they failed to forecast.
The reality, as Zeberg sees it, is starkly different: “Stock Market and Crypto will SOAR into early 2024. Euphoria will develop. Everybody will get onto the wrong side of the boat – just as Equity and Crypto Markets put in a major top. Recession sets in a few months later in 2024.”
In conclusion, Zeberg’s analysis foresees a major recession, one that he believes is inevitable and imminent. “The Titanic has already hit the Iceberg – and it will sink,” he starkly notes, dismissing any interventions from the Fed or any administration as futile.
The question is how Bitcoin might behave in a recession, something the cryptocurrency has not experienced since its inception in 2009. Will BTC become a safe haven, or will it follow the fate of equities, as Zeberg predicts?
At press time, the Bitcoin price continued its sideways trend, trading at $42,392.
Featured image from DALL·E , chart from TradingView.com
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