The U.S. Treasury yield curve, one of the most reliable signals of recession, is flashing red again.
As of March 2025, the spread between the 10-year and 2-year Treasury yields remains inverted, a condition similar to that preceding every U.S. recession of the last five decades.
Historically, an inverted yield curve makes the cost of borrowing in short terms more expensive than in longer ones—an unusual condition in well-functioning economies.
It is often taken as a sign that monetary policy is too tight and an economic slowdown is on the way.
This curve’s last prolonged inversion came before the 2008 financial crisis and early 2020, before the COVID-induced recession.
On March 25, financial commentator Peter Schiff posted on X, saying, “Powell said there’s no evidence of a weak U.S. economy. March data says otherwise. Philly Fed Services tanked to -32.5, its weakest since COVID in April 2020, the Richmond Fed Mfg. Index sank to -4, & Consumer Confidence plunged to a 12-year low, the 4th consecutive monthly drop” hinting at a potential market downturn.”
However, the effects of a recession extend far beyond the world of stocks and bonds. Crypto investors monitor macroconditions closely in the digital asset space.
Multiple cyclical metrics suggest Bitcoin may be entering a period of weakness, though not necessarily an entire bear market, according to leading on-chain analyst Burak Kesmeci.
Kesmeci says, “All these metrics suggest that Bitcoin is experiencing significant turbulence in the short to mid-term. However, none of them indicate that Bitcoin has reached an overheated or cycle-top level. This resembles the carry trade crisis of August 5, 2024, which also drove Bitcoin lower due to macroeconomic conditions.”
Bitcoin’s IFP is 696K versus a 90-day moving average of 794K, suggesting a continuation of bearish momentum.
The CQ Bull & Bear Market Indicator reflects the same negative pattern in which the short-term momentum (DMA30: -0.16) has yet to break above long-term trendlines (DMA365: 0.18). Two other major metrics — MVRV and NUPL — also still sit below their 365-day averages, which indicates a low level of confidence amongst investors.
Moreover, macroeconomic pressures include shifts in tariff policy under the Trump administration or enduringly tight financial conditions. None of these metrics mean that Bitcoin has reached a cycle top, but they are similar to the patterns observed in previous macro-driven corrections like the August 2024 carry trade crisis.
“Normally crypto has moved in relation to traditional stock markets. However, Crypto’s decentralization nature could attract investors from Tradfi grabbing on to hedge opportunities. For crypto, it will depend on investor sentiment and liquidity in the market.” says Slava Demchuk, CEO of Blockchain analytics firm AMLBot.
For more traditional investors, caution is prudent. The inverted yield curve suggests a possible recession, and on-chain signals are still bearish—although this need not mean a crash. Historical evidence suggests that markets tend to bounce back when macro pressures ease.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always conduct your own research.
