Bitcoin Faces the American Paradox: More Growth, Less Hope for Low Rates

The American recession is still on hold. The GDP of the United States grew by 3.4% on an annualized basis in the third quarter, above the 3.2% expected by consensus, and the Fed's GDPNow model from Atlanta is already forecasting 3.2% for the fourth quarter. An economy growing at this pace does not require any emergency monetary infusion. However, the crypto markets thrive on cheap liquidity, and this robust health of the American economy seriously complicates their situation.

Key Points

• The American growth rate for the third quarter stands at 3.4% on an annualized basis, above the consensus (3.2%)
• Converted to European terms, this rate equates to an increase of about 0.8% quarter-on-quarter
• The Fed kept its rates at 3.75-4% on October 28 and has no urgency to ease its policy
• Bitcoin had already quadrupled in 2023-2024 with interest rates at their highest in over twenty years

American Growth at 3.4% in the Third Quarter

The figure was released on October 29. According to the first estimate from the Bureau of Economic Analysis, the American GDP grew by 3.4% on an annualized basis in the third quarter, driven by investment (with stocks and computer equipment leading), household consumption, and public spending. The consensus expected 3.2%, while the GDPNow from the Fed of Atlanta predicted 3.3%. This model operates without human intervention: since 2014, it has provided an estimate of the current quarter (GDP for Gross Domestic Product) recalculated six to seven times a month, based on retail sales, trade balance, construction spending, and ISM surveys. No economist adds their judgment: the algorithm aggregates already published statistics and converts them into growth rates.

However, one must read the figure correctly. The United States publishes its growth on an annualized basis (which corresponds to the rate that would be achieved for the entire year if the quarter were repeated four times in a row), whereas INSEE and Eurostat stick to the quarter-on-quarter variation. Translated into European language, these 3.4% become approximately 0.8% for the quarter.

For the fourth quarter, GDPNow already shows 3.2%, a figure to be taken with caution. In the first quarter of 2025, massive gold imports intended to preempt Donald Trump's tariffs had plunged the estimate into negative territory, forcing the Fed of Atlanta to publish a corrected version of these flows. The first weeks of a quarter remain the most fragile. The margin of error tightens as actual data replaces the model's assumptions. The US shows growth above expectations -- Source: Compte X JDC

What 3.4% Growth Means for the Fed and Bitcoin

An economy advancing at this pace does not require rescue. On October 28, the Fed maintained its key rates between 3.75 and 4%. The mandate of the American central bank consists of two objectives, full employment and price stability, and neither supports a rapid easing when activity exceeds 3%. Traders betting on a wave of rate cuts are revising their timelines, the dollar remains stable, and the most interest-sensitive assets are feeling the backlash.

Recent history, however, suggests not to confuse high rates with a bear market. Between January 2023 and March 2024, Bitcoin rose from $16,500 to over $73,000 while the Fed funds were at 5.25-5.50%, their highest since 2001. High rates did not hinder growth. Risk appetite weighs more than the exact level of the key rate, and a growth rate of 3% supports it quite well.

Sustained growth does not equate to a balanced budget. The American federal deficit still exceeds 6% of GDP while the machine runs at full capacity, and public debt has surpassed $40 trillion. Each quarter of strong nominal growth inflates tax revenues without closing the gap, leaving the US Treasury with only one option: to issue more debt.

For Bitcoin, solid American growth thus sends a mixed signal: it can support risk appetite while reducing expectations for rapid rate cuts. However, the GDP figure alone is not enough to determine the Fed's policy, which also depends on inflation and employment. The trajectory of the crypto market relies on this balance, as much as on its own demand drivers.

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