Bank of America strategists reportedly say that a shift in the macroeconomic landscape could be the catalyst that sends the crypto markets to higher prices.
According to Reuters, analysts at the banking giant have sent a new note to clients warning that accelerating inflation and a slowing global economy could spread to US markets.
The analysts say that a deteriorating economy would likely force the Federal Reserve to tighten its monetary policy to control persistent inflation, which could put big sell pressure on equities and traditional assets.
BofA chief investment strategist Michael Hartnett reportedly says,
“‘Inflation shock’ worsening, ‘rates shock’ just beginning, ‘recession shock’ [is] coming.”
Hartnett added that in such a climate, cash, volatility, commodities and crypto could become the most appealing assets to investors, outrunning both equities and the bond market.
Earlier this week, the Federal Reserve released meeting minutes that confirmed that Fed officials all agreed that raising the federal funds rate would be necessary to curb inflation.
“In their consideration of the appropriate stance of monetary policy, all participants concurred that the US economy was very strong, with an extremely tight labor market, and that inflation was high and well above the committee’s 2% inflation objective.
Against this backdrop, all participants agreed that it was appropriate to begin a process of removing policy accommodation by raising the target range for the federal funds rate at this meeting. They further judged that ongoing increases in the target range for the federal funds rate would be warranted to achieve the committee’s objectives.”
Last month, Bloomberg’s head commodity strategist Mike McGlone also that a potential recession could end up being bullish for Bitcoin. According to the analyst, BTC is transitioning from being a risk-on asset that trades in tandem with tech stocks to a risk-off asset that investors use to store value during times of economic uncertainty.
“What I see it’s doing is shifting from risk-on to risk-off. It might get to $30,000, but if it goes there imagine where the stock market will be.
It can easily correct 30%, 40% in the stock market, it’s happened in history. Then I think Bitcoin comes out ahead.
I still think based on supply and demand and adoption trends, it’s just a matter of time before it gets to $100,000. This could be part of that base-forming period.”
