According to Bank of America, it may be time to return to the cryptocurrency market. While experts expect sharp movements from the stock markets in the coming months, the cryptocurrency side will accompany it.
BoA reveals the best time to return to the cryptocurrency market
The cryptocurrency market has been struggling with the bleak economic environment for some time now. However, a recent assessment by Bank of America suggests that cryptocurrencies may have bottomed out. According to a survey of several hedge fund managers, we are close to significant fluctuations. Respondents predict drastic moves will emerge in early 2023. Therefore, bank analysts say that it is appropriate to invest in crypto again.
Barriers to the cryptocurrency market
Traditional markets and the crypto market have significant correlations. The correlation between these markets is measured in the term “beta”. According to Coinbase Research, the crypto market has a beta of 2 showing that it experiences twice the price action than the general markets. As a result, it exhibits a strong correlation with tech stocks and the NASDAQ 100 index.
This relationship is causing a significant sell-off in the cryptocurrency market. On the other hand, the Fed is busy shrinking its inflated balance sheet. Quantitative tightening and rate hikes also cause stock markets to crash. During the process, the Fed increased interest rates by 75 basis points four times in a row. The latest PPI and CPI data almost warrant another big increase.
But experts are worried whether the Fed will need to change course to maintain financial stability around the world. Fears of recession, deflation and stagflation have increased significantly. Bank of America’s survey predicts the Fed will change course in early 2023. According to the survey, market liquidity is drastically diminishing and the stock market accurately reflects investor pessimism.
The ideal moment to invest in Bitcoin
According to Bank of America, a significant stock bull will begin in the first half of 2023. Cryptocurrency and market analyst Florian Grummes predicts that the crypto winter will be extended for another year and a half.
At the time of writing, Bitcoin price is approaching $20,000 following October 13th inflation data. According to data tracked by CryptoQuant, on October 18, more than 37,800 BTC left crypto exchanges. This marks the largest daily Bitcoin outflow since June 17, when investors pulled around 68,000 BTC from exchanges. As you follow on Kriptokoin.com, the concerns about Bitcoin are not limited to its price. There is currently talk of a bill restricting crypto mining in the European Union.
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