Bitcoin, Stocks and Commodities Will Rise as Fed Is Forced to Swing and Continue Money Printing: Myntbyrå
A popular cryptoanalyst is making a macroeconomic forecast to see what the future may hold for risky assets like Bitcoin (BTC).
In a recent strategy session, the pseudonymous host of Coin Bureau known as Guy notes that periods of high inflation have historically lasted about three years, which may provide clues as to when the financial landscape may change.
“When inflation will come down is anyone’s guess, but history suggests that periods of high inflation last about two to three years at a time, at least in the US.
Not surprisingly, this is consistent with the length of Fed interest rate cycles, which also last two to three years at a time…
“The scary thing is that what has historically brought down inflation was not the Fed’s rate hikes, but rather the recessions those rate hikes caused.
As the saying goes, history doesn’t repeat itself, but it does. That means we are likely to see a similar economic downturn in the coming months.”
Due to geopolitical conflicts in Eastern Europe, Guy speculates that local production will keep prices high for consumers, and risky assets like cryptocurrencies may be hurt by this reshaped landscape in the short term, but will remain strong in the long term.
“The world seems to be deglobalizing, which means that more and more manufacturing will happen at home, or at least closer to home. The consensus seems to be that this will lead to the prices of certain goods and services remaining high indefinitely.
If you’re wondering where crypto fits into all of this, the answer is that it doesn’t. BTC has proven to be an inflation hedge in the long term, but it’s not going to be much help in the short term while the Fed’s rate hikes cause investors to pull out of risky assets to repay debt.”
The analyst says that while most asset classes will stagnate during a recession, he believes that over the long term, stocks, cryptocurrencies and perhaps commodities will reward investors for weathering the effects of inflation.
“It’s also unclear how crypto will handle a recession, but given crypto’s high correlation with tech stocks, it’s fair to assume it probably won’t be pretty.
The upside to this situation is that the Fed will inevitably reverse course, as it always does. This will ultimately cause stocks, cryptocurrencies and potentially commodities to rise, fulfilling their roles as long-term inflation hedges.”
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