The Fed is optimistic about the American economy – What does this mean for the crypto market?

Despite negative forecasts in the first quarter, the Atlanta Federal Reserve is currently estimating that GDP in America will grow by up to 4.6% in the second quarter of 2025. This sudden surge could open the door to a new wave of capital flowing into the crypto market.

However, this rapid reversal has made some economists skeptical about the accuracy of the forecast. Tariff policies, sanctions, and trade wars may soon be reactivated by President Donald Trump, posing a risk of returning the crypto market to a state of chaos.

Is America’s GDP really growing?

Just a few weeks ago, the crypto market was still overshadowed by a series of recession signals. In February, the Atlanta Fed had forecasted that GDP in America would contract. Other federal agencies also expressed similar concerns in April.

However, new trade agreements have caused forecasts to change significantly. The Fed Atlanta now predicts that GDP in Q2 2025 will grow by 4.6%.

GDP forecast for Q2 by Atlanta Fed | Source: Atlanta FedIf this number is accurate, it will be an extremely positive signal for the crypto market. Bitcoin has recently been less volatile, causing large corporations to view it as a safe-haven asset similar to "digital gold."

Strong economic growth can dispel concerns of recession, driving capital into riskier assets like crypto.

But is this an excessive correction?

A few months ago, the Atlanta Fed was still predicting the economy was about to enter a recession. Will the fundamental elements of US GDP really change so quickly?

The end of tariffs between America and China has given a boost to the crypto market, but President Trump is currently considering imposing new sanctions as a replacement. He is also restarting tariffs with Europe, which are expected to take effect soon.

If the trade war returns, GDP growth may plummet again as before. Some economists still warn of a significant risk of collapse in the stock market. Meanwhile, the Court is looking to limit Trump's authority to impose tariffs, making the situation even more unpredictable.

If there are no major fluctuations, the economy of America may enter a positive phase. However, any secondary factors could ignite a new wave of chaos.

Regardless, Bitcoin is still considered a hedge against inflation and macro risks. The crypto market will still find ways to develop, but the outlook for the next 3 months remains very uncertain.

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