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Early today, Ki Young Ju boldly declared the official onset of a bear market in cryptocurrencies. He forecasts a decline over the next 6-12 months based on on-chain metrics. However, the timing of bull markets remains elusive. As the global economy evolves, Fitch Ratings has updated its forecasts.
2025 Economic Projections
The U.S. is initiating a global trade war, sharply lowering world growth predictions. Fitch Ratings cites three main effects of the trade war initiated by the new U.S. administration. Both U.S. and global growth will decrease, inflation in the U.S. will rise, and the Fed’s rate cuts will be delayed. These factors spell disaster for Bitcoin 
$105,975 and cryptocurrencies, which have yet to be considered a safe haven asset.
“In our December 2024 Global Economic Outlook (GEO) report, we reduced our U.S. 2025 growth forecast from 2.1% to 1.7% and our 2026 estimate from 1.7% to 1.5%. These figures are substantially below trend and lower than the nearly 3% annual growth seen in 2023 and 2024.”
China and Germany’s fiscal easing will mitigate the effects of high import tariffs in the U.S., yet this year’s Eurozone growth will be much weaker than previously predicted. Mexico and Canada will face technical recessions due to the magnitude of U.S. trade risks, leading to annual 2025 forecasts being downgraded by 1.1 and 0.7 points, respectively.” – Fitch Ratings Report
The global growth rate, which was 2.9% last year, has fallen to a trend significantly below at 2.3% this year. This downward revision is expected to continue next year with a forecast of 2.2%.
Global Trade War and Crypto
The effective tariff rate (ETR) in the U.S. rose from 2.3% to 8.5% in 2024 and is likely to increase further. Tariffs on China are at 35%, with 15% on Canada, Europe, and Mexico, marking the highest rates in the last 90 years.
The extent of U.S. actions remains uncertain, leading rating agencies to acknowledge that assumptions may be too harsh. However, the U.S. is not on a positive trajectory. Aiming to increase domestic manufacturing and diminish the trade deficit, Trump may contribute to rising consumer prices. By 2026, GDP in the U.S., China, and Europe is expected to rise by about 1 point according to forecasts. Tariffs are anticipated to add 1 point to U.S. inflation, delaying interest rate cuts until the last quarter of 2025. The 2026 forecast includes three interest rate cuts.
