After contracting in the first quarter of 2023, the German economy has officially entered into recession, according to data from the country’s statistics office.

A recession is generally identified when there is a decline in the gross domestic product (GDP) in two successive quarters. In Germany’s case, the country’s GDP reportedly fell by 0.3% for the quarter, following a decline of 0.5% in the fourth quarter of 2022.

Members of the crypto community were split on the potential effects of the recession on the crypto economy. While some believe it’s a bullish signal for crypto, others think it might not have that much-desired effect on the space.

On Twitter, some were saddened by the news but believed that the event was still a bullish sign for crypto.

Community members believe that it’s a bullish sign. Source: Twitter

On Reddit, a community member argued that it’s possible interest rates in the country could be brought down to stimulate the economy. When this happens, the Redditor thinks more investment could flow into crypto and trigger a bull market.

Related: German banks slowly adopt crypto, mostly for institutional investors

However, some believe that it might have a negative effect in the short term. A Reddit user believes that in the case of a recession, “all speculative markets will lose ground.” Despite this, the community member still believes that it could offer a big opportunity for those who perform dollar-cost averaging when “things look the bleakest.“

Community members sharing their thoughts on the recession. Source: Reddit 

In the long term, one community member believes there could be a positive outcome. A Reddit user pointed toward the performance of the markets after the COVID-19 pandemic, where Bitcoin (BTC) reached new all-time highs.

Meanwhile, in the United States, the probability of further interest rate hikes resulted in bearish sentiment and digital asset outflows of $72 million. On May 2, investment firm CoinShares reported that crypto market funds had outflows across jurisdictions, including Germany.

Magazine: Ripple, Visa join HK CBDC pilot, Huobi accusations, GameFi token up 300%: Asia Express