Recession Odds Reach All-Time High After Negative Q1 GDP Numbers, But Crypto Bettors Don't See Emergency Rate Cut Anytime Soon

The odds that the U.S. slips into recession in 2025 sailed to a record high Wednesday on Polymarket after first-quarter GDP showed a contraction.

What happened: Odds jumped to 72% in the early hours on the Polygon (CRYPTO: POL)-based betting platform before dipping to 62% late in the evening. 

People buy and sell outcome shares, i.e., "yes" and "no," with those reflecting the correct, final outcome paying out $1 in USD Coin (CRYPTO: USDC) apiece upon market resolution.

In this case, the market will resolve to yes if the U.S. GDP contracts for two straight quarters or if the National Bureau of Economic Research declares a recession before Jan. 1, 2026. Nearly $4 million has already been wagered on the outcome.

Recession odds for 2025 also soared on the CFTC-regulated betting platform Kalshi, reaching an all-time high of 74%.

Note that, unlike Kalshi, Polymarket is not available to U.S. residents.

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Meanwhile, the odds that the Federal Reserve will introduce an emergency rate cut remained largely unchanged at 28%, as policymakers signaled no change in monetary policy until inflation nears the central bank’s 2% goal, according to Reuters.

Emergency meetings happen during periods of economic crisis. The bank held an emergency meeting in March 2020 in reaction to the risk posed by the COVID-19 pandemic to the economy.

Interestingly, traders expected rates to remain unchanged in next week’s FOMC meeting but priced in a 64% chance of a 25 basis point cut in June, according to the CME FedWatch tool.

Why It Matters: The economy shrank by 0.3% on an annualized basis last quarter, down from 2.4% growth in the previous quarter and well below the expected 0.4% growth. 

The contraction, the first since the second quarter of 2022, was attributed to the surge in imports as companies sought to avoid President Donald Trump’s sweeping tariff measures that could come into effect later this year. Economist?Joseph Brusuelas anticipated a recession more likely by midyear.

Photo Courtesy: Andrii Yalanskyi On Shutterstock.com

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