Crypto prediction markets are signaling growing expectations of a U.S. recession this year after fresh economic data showed the economy contracted in the first quarter of 2025.

According to the latest figures released by the US Commerce Department, gross domestic product declined by 0.3% between January and March. This drop comes after a 2.4% expansion in the previous quarter, marking the first economic pullback since 2022.

Following the report, users on the decentralized betting platform Polymarket have pushed the odds of a 2025 recession to 66%, the highest recorded this year.

The event market has also seen strong engagement, with over $3.8 million in total volume traded as of press time.

Meanwhile, the sentiment is mirrored on Kalshi, a regulated event-trading exchange, where the odds of a recession this year rose to a high of 74% but slightly retracted to 71% as of press time.

Reacting to the economic downturn and the increased probability of a recession, US lawmaker Daniel Goldman strongly rebuked the Trump administration’s trade policies.

He argued that the tariffs have already driven up consumer costs, weakened confidence, and contributed to the decline in GDP.

Goldman said:

“Trump is the first president to knowingly crash the economy…As he barrels us into a recession, working people will suffer while his cronies get rich.”

Institutional investment in Bitcoin (BTC) has strengthened, but its price has struggled to reflect the growing demand, according to BlackRock’s Global Head of Digital Assets, Robbie Mitchnick.

Despite continued adoption by large financial players, Bitcoin has experienced significant ETF outflows and cautious sentiment in early 2025, which have kept prices below previous highs.

Mitchnick noted that short-term market behavior and macroeconomic uncertainty have slowed momentum despite optimism surrounding regulatory shifts in Washington initially drove gains,

Recession could be catalyst

Speaking with Yahoo Finance on March 18, Mitchnick argued that Bitcoin’s fundamental characteristics — scarcity, decentralization, and independence from traditional monetary systems — position it as a strong hedge against economic downturns.

He further suggested that a US recession could serve as a major catalyst for Bitcoin’s next rally.

According to Mitchnick:

“A recession would be a big catalyst for Bitcoin. It’s long liquidity, meaning it benefits from increased fiscal spending, deficit accumulation, and lower interest rates — all typical features of a recessionary environment.”

Mitchnick highlighted that while gold has surged to record highs amid growing economic uncertainty, Bitcoin has not yet mirrored that trend. He attributed this divergence to Bitcoin’s short-term trading trends, where it is often treated as a risk-on asset rather than a store of value.

Additionally, he explained that recent Bitcoin ETF outflows have been primarily driven by hedge funds unwinding spot-futures arbitrage trades rather than long-term investors exiting the market.

He emphasizing that institutional confidence in Bitcoin remains strong despite short-term volatility, saying:

“The core long-term holders are still in.”

US Bitcoin reserve

Mitchnick also weighed in on President Donald Trump’s move to establish a US Strategic Bitcoin Reserve, calling it a strong signal of support for BTC’s unique status within the digital asset space.

However, he noted that the specifics of how the government plans to acquire and manage Bitcoin remain unclear, which does not help with the current uncertainty prevalent in the market.

Mitchnick also indicated that institutional capital is still flowing into the market. He noted that professional investors appear to be taking advantage of the current dip, with many treating Bitcoin’s price weakness as an accumulation opportunity.

He said:

“Some of the most sophisticated Bitcoin accumulators we speak with are treating this dip as an opportunity.”

Despite ongoing regulatory uncertainties and security concerns in the broader crypto industry, Mitchnick remained optimistic about Bitcoin’s long-term role.

He also argued that investors will increasingly view Bitcoin as a hedge against traditional financial instability, potentially driving renewed momentum in the months ahead amid the uncertain economic landscape.

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