Economic Hardships and Inflation Could Bring Crypto Markets to New Highs – Bank of America
As reported by Reuters on Friday, Bank of America analyst have issued a note to clients warning of the possible effects of the surging inflation on the US markets. Nevertheless, the bank’s analyst come with a silver lining for crypto, as they believe the changing macroeconomic dynamics could shoot cryptocurrencies to new highs.
A deteriorating economy could force the Federal Reserve to tighten its monetary policy to control inflation, the note reads, which would then lead to increased selling pressure on equities and traditional assets.
BofA chief investment strategist Michael Hartnett said:
“‘Inflation shock’ worsening, ‘rates shock’ just beginning, ‘recession shock’ [is] coming.”
When such scenario manifests, Hartnett added, crypto could become best option for investors, outperforming both equities and the bond market.
Federal Reserve officials last week agreed that to battle inflation, federal funds rates need to be raised, as meeting minutes revealed:
“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.”
The banking giant has largely been positive about cryptocurrencies and Bitcoin, calling the asset-class “too large to ignore”. The bank is also positive about El Salvador’s recognition of Bitcoin as legal tender, noting it could streamline remittances, promote financial digitization, provide consumers with greater choice.
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Source: igaming
