The ongoing transition in the global economic order is likely to be marred by periods of uncertainty and risk, increasing the demand for safe haven assets and alternative payment mechanisms, Sygnum’s Head of Investment Research, Katalin Tischhauser, writes in our Crypto Market Outlook 2025. Download the full report to get the complete story.
The contradiction in aiming to reduce government deficit while having a set of policies that will likely increase the deficit or in cutting interest rates while proceeding with quantitative tightening suggests the current system is in a tough spot. The recent set of policies have reshaped long-standing economic relationships, and their net effect has been an unchecked increase of government debt – without plans or proposals for arresting the trend.
The typical negative correlation between GDP growth and unemployment has transformed over the past few years. Since 2021,unemployment and GDP have been positively correlated. This sounds paradoxical, and it suggests that the engine of GDP growth is no longer organic economic activity but rather that growth is subsidised by government spending while higher unemployment keeps inflation
in check.
Although it has been suggested that the rise in unemployment is in part due to an uptick in immigration, in prior periods when immigration increased strongly (e.g. pre-2015), this did not upend the normal relationship between growth and unemployment.
At the same time, the BRICS economic bloc is growing fast, both in terms of the number of countries applying to join and in terms of the BRICS economies outpacing most of the Western economies. At this point, the top four economies in terms of purchasing power parity GDP according to statistics from the International Monetary Fund (IMF) include three BRICS countries and only one Western country (the US, in second place), while Japan and Germany have been relegated to the fifth and sixth positions, respectively.
As the BRICS countries build alternative payment, settlement, investment and trade infrastructures, there is further pressure on the US monetary system from dedollarisation. Although the shift is gradual and it is likely to take some years before a new order takes shape, the trajectory for change appears to be set.
Meanwhile, the US is highly motivated to fight this trend, and a number of statements by Donald Trump and other US politicians suggest that they may be looking to the crypto market for answers to the mounting national debt and to dedollarisation – with the establishment of a Bitcoin reserve and support for the growth of the dollar stablecoin market.
BRICS countries are also softening their stance on crypto. Russia is actively encouraging the use of cryptocurrencies in transactions, while there are signs that China’s crypto ban may be relaxed.
Meanwhile, major transitions in the economic order are likely to be marred by periods of uncertainty and risk, increasing the demand for safe haven assets and alternative payment mechanisms. It is not surprising that the price of gold has reached repeated all-time highs all year, with the silver price increasing in tandem. This has increased the demand for Bitcoin as well, with US plans for a Bitcoin reserve now giving further impetus to the already ongoing diversification from precious metals to Bitcoin.
Sign up for Future Finance
Join our 40,000 strong global community to future proof your investments. Sign up now to be the first to receive our news, product launches, industry reports and educational series.
Disclaimer: The information in this publication pertaining to Sygnum Bank AG (“Sygnum”) is for general information purposes only, as per date of publication, and should not be considered exhaustive. This publication does not consider the financial situation of any natural or legal person, nor does it provide any tax, legal or investment advice. This publication does not constitute any advice or recommendation, an offer or invitation by or on behalf of Sygnum to purchase or sell any assets. No elements of precontractual or contractual relationship are intended. While the information is believed to be from accurate and reliable sources, Sygnum makes no representation or warranties, expressed or implied, as to the accuracy of the information. Sygnum expressly disclaims any and all liability that may be based on such information, omissions, or errors thereof. Any statements contained in this publication attributed to a third party represent Sygnum‘s interpretation of the data, information and/or opinions provided by that third party either publicly or through a subscription service, and such use and interpretation have not been reviewed by the third party. Sygnum reserves the right to amend or replace the information, in part or entirely, at any time, and without any obligation to notify the recipient of such amendment / replacement or to provide the recipient with access to the information. Simultaneously, there is no obligation of Sygnum to inform recipients of information, if before provided information later becomes outdated, inaccurate or obsolete, unless otherwise provided by applicable law. The information provided is not intended for use by or distributed to any individual or legal entity in any jurisdiction or country where such distribution, publication or use would be contrary to the law or regulatory provisions or in which Sygnum does not hold the necessary registration, approval authorisation or license. Except as otherwise provided by Sygnum, it is not allowed to modify, copy, distribute or reproduce, display, license, or otherwise use any content for commercial purposes.