Bank of America Analysts: Cryptocurrencies as Potential Top Performers in a Recession

Inflation shock, interest rate shock, recession shock
Cash, commodities and cryptocurrencies in focus
Digital assets offered by financial institutions

As Reuters reports, the strategists at Bank of America also warn in their weekly research note that the inverse yield curve (inverted yield curve of the yields on 2-year and 10-year government bonds) in the USA has manifested itself. The deteriorating macroeconomic situation and the Fed’s tightening of interest rates to curb inflation could push the US and global economy into recession, experts say.
According to the FOMC’s March 16 announcement, the Federal Reserve is expected to start downsizing its total assets of approximately $9 trillion at its early May meeting. The majority of BoA analysts also expect the US Federal Reserve to raise the key interest rate by 50 basis points.

Cryptocurrencies in Recession Response

The bank’s chief strategist, Michael Hartnett, warned in the statement to clients that rising inflation could trigger a shock to the economy: the “inflation shock” would worsen, the “interest rate shock” would begin, the “recession shock” would come.
What’s really surprising about this, however, is the conclusion the investment strategist draws: Cash, commodities and cryptocurrencies could weather inflation better than stocks and bonds. Most assets are subject to massive fluctuations in a recession, but bonds and stocks will underperform.

Financial institutions and cyberforex

In the past, traditional financial institutions such as Bank of America were rather critical of the crypto industry, but major players such as JPMorgan, Goldman Sachs and Citigroup have also expanded their involvement in the crypto sector.
For Bank of America, at least since last year, bitcoin has become too big to ignore. By the way, Deutsche Bank uses the same words in its announcement on the Tinkerbell effect of Bitcoin from March 2021.
In its research report on digital assets in October 2021, the major American bank emphasized that in addition to the crypto veteran Bitcoin, other cyber currencies, NFTs and DeFi as well as the effects on other industries, social media and gaming are also in focus. “Digital assets are transforming the way markets, corporations and central banks operate,” said Candace Browning, head of BofA Global Research, adding that research on digital assets enhances the bank’s offering as a leading global payments platform with blockchain expertise intensified.
In recent months, analysts have commented on the crypto universe on various occasions, for example in December 2020 on the enormous opportunities in the Metaverse or in January 2021 on the market capitalization of the smart contract platform Solana, which could overtake Ethereum as the leading blockchain.

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