Bitcoin Soars Past $112K, SOL Hits 7-Month Peak as Economists Dismiss Recession Worries

Crypto markets surge as recession fears fade—traders pivot from traditional safe havens to digital assets.

Bitcoin's Bull Run

The flagship cryptocurrency smashed through the $112K barrier, signaling renewed institutional confidence as macroeconomic headwinds ease.

SOL's Resurgence

Solana rockets to levels not seen in seven months, outpacing broader altcoin gains while developers flock to its high-throughput ecosystem.

Economists Shift Tone

Wall Street analysts quietly downgrade recession probabilities—though some whisper this might just be another 'transitory' narrative from the same crew who missed inflation.

Digital gold shines brighter than the old stuff when the Fed's printing press gets dusty.

Stagflation fears are exaggerated

The BLS revisions and the impending U.S. CPI data, which is expected to show inflation sticky at around 3% (well above the Fed's 2% target), have reinstated fears of stagflation, a situation characterized by persistent high inflation combined with high unemployment and stagnant economic growth. Stagflation is widely seen as the worst outcome for risk assets, including bitcoin.

However, fears that the economy is heading into stagflation seem overdone, according to Marc Chandler, Managing Partner and Chief Market Strategist at Bannockburn Global Forex, who noted that the U.S. GDP is still running above the Federal Reserve's "trend estimate" or a non-inflationary pace.

"I think stagflation is still exaggerated. The Atlanta Fed tracker still has the GDP well above the Fed's trend estimate, its non-inflationary pace.

Yes, inflation is a bit elevated, and it is likely to be more so with the August CPI print on Thursday. However, Fed officials, such as Waller and Bowman, want to look through tariff-related increases," Chandler told CoinDesk.

"It seems to me clear that the Fed will resume its easing course next week," he added.

Traders have pencilled in a 91% chance of the Fed cutting rates by 25 basis points to 4% on Sept. 17, according to the CME's FedWatch tool. Some investment banks and traders are anticipating a larger 50-basis-point rate cut.

Focus on U.S. CPI

These easing expectations could further strengthen if Wednesday's U.S. producer price index (PPI) and Thursday's consumer price index (CPI) unexpectedly signal disinflation, which WOULD help risk assets remain bid over the near term.

That said, increased expectations could set the stage for disappointment.

"I think the CPI print this week will give us more context... If the market expects 50bps points to be cut, but FOMC Sept 17th only delivers 25bps... we'll get a sell-off," Greg Magadini, Director of Derivatives at Amberdata, told CoinDesk.