Renowned macroeconomist Henrik Zeberg caused a stir in the financial world with a dire forecast on X (formerly Twitter), predicting a sharp rise in the price of Bitcoin to a peak of $115,000-$150,000. However, this meteoric rise is predicted to end abruptly, triggered by a devastating macroeconomic downturn that Zeberg expects will be the worst since the crash of 1929.
Why a recession will hit the US in 2024/2025
Seberg's argument is based on seven reasons. Zeberg states: “Our business cycle has signaled a recession in 2023. Leading indicators have fallen below our equilibrium line. In 80 years of data collection, our model's recession signal has NEVER been wrong. No false signals, ever! This model, with its unshakable accuracy over eight decades, forms the basis of his dire forecast.
Zeberg also delves into the significance of yield inversions, a well-documented precursor to economic downturns. Even though analysts have dismissed this signal in 2023 due to impatience, Zeberg emphasizes its historical validity, noting: “From the bottom of the yield inversion, we typically see 12-15 months before the onset of a recession. This signal is very lively!” His remarks highlight the widespread underestimation of this important indicator.
The economist further examines the trajectory of US industrial production, drawing troubling parallels to the period immediately before the 2007-08 financial crisis. He sees a similar pattern of divergence and warns of a looming large drop in industrial production, signaling the start of a recession.
Zeberg's analysis extends to the housing market, where he highlights the sharp decline in the NAHB index as an important warning sign. “The greater the decline in NAHB, the greater the increase in unemployment,” he states, pointing to a direct link between the housing market distress and the economy as a whole. This situation is exacerbated by rising interest rates, which leads to a reduction in consumer spending and, as a result, an economic recession.
Moreover, personal interest payments are another cornerstone of Zeberg's argument. He notes a historical pattern in which rising market rates burden consumers with higher mortgage and debt payments, ultimately leading to recessions. “Every rate increase over the years has caused a recession as consumers have to cut back on consumption,” warns Zeberg, highlighting the lag inherent in the economic business cycle.
Housing affordability, or lack thereof, is also an important component of his analysis. With housing affordability falling below pre-financial crisis levels, Zeberg paints a bleak picture of a near future where worsening unemployment could lead to widespread defaults and a collapse of the housing market.
Finally, Zeberg points to bloated inventories at retailers and companies around the world. He describes it as a hangover from the 2021-2022 demand rush driven by stimulus funds that have since dried up. In his opinion, this discrepancy between supply and expected demand is a ticking time bomb for the economy.
Bitcoin: a mirage before the storm
In the midst of this gloomy economic forecast, Zeberg is paying particular attention to Bitcoin. He predicts a fleeting period of euphoria for the cryptocurrency, with its value soaring to an all-time high, potentially reaching $115,000 to $150,000. He also provocatively states: “@Peter Schiff: See you at BTC = 100X 1 oz gold.”
See you at BTC = 100X 1 ounce of Gold
— Henrik Zeberg (@HenrikZeberg) January 17, 2024
However, Zeberg warns that this surge is part of a broader, misleading narrative. “The soft landing narrative is what will dominate the top #Equities #cryptocurrency #BTC,” he elaborates. This version, he believes, is a mirage that will mislead economists and analysts trying to rationalize the “blow from above,” a phenomenon they failed to predict.
The reality, according to Zeberg, is completely different: “The stock market and cryptocurrency will take off before the beginning of 2024. Euphoria will develop. Everyone will end up on the wrong side of the boat – just like the stock and cryptocurrency markets hit a major top. The recession will come in a few months, in 2024.”
In conclusion, Zeberg's analysis foresees a severe recession, which he believes is inevitable and inevitable. “The Titanic has already hit the iceberg and it will sink,” he says sharply, deeming any intervention by the Fed or any administration futile.
The question is how Bitcoin can perform in a recession, something the cryptocurrency has not experienced since its inception in 2009. Will BTC become a safe haven or will stocks follow the fate as Zeberg predicts?
At the time of publication, the price of Bitcoin continued to move sideways, trading at $42,392.
BTC price continues sideways, 4-hour chart |Source: BTCUSD on TradingView.com.