Bitcoin (BTC) is likely to stage a rally of disbelief amid the economic recession, according to CoinShares
A leading digital asset manager believes a bleak financial outlook for the United States could be bullish for Bitcoin (BTC).
In a series of posts, CoinShares explains how a confluence of economic factors and government decisions will likely cause Bitcoin’s performance to diverge from other assets when the reality of a recession sets in.
“While we expect the Federal Reserve to hike rates further over the summer, we also believe it is likely to adopt a weaker outlook for economic growth thereafter, leading to significant dollar weakness.”
The company believes BTC will rise if the Federal Reserve fails to curb inflation and dollar strength ebbs, noting that growth stocks would suffer more amid deteriorating economic conditions.
“We believe a policy blunder is highly likely where bitcoin prices are likely to diverge from growth stocks, with the former likely to benefit from a dovish Fed and a weaker US dollar, while the latter underperform amid recession or stagflation .”
CoinShares also says that while BTC hasn’t rallied despite the Fed raising rates four times this year alone, the crypto king could still be rewarding investors.
“Although bitcoin price action has been weak in the face of an aggressive Fed, this current pause in price action may be short-lived.”
The latest findings come two months after CoinShares extensively discussed how a recession would affect Bitcoin’s price outlook.
At the time, the company also drew attention to the price of oil and the recent turmoil in the crypto markets while assessing how interest rate hikes and US dollar strength were affecting BTC’s valuation.
“Bitcoin now has a well-established inverse correlation to the US dollar.
This makes sense given its emerging store-of-value properties, but also makes it incredibly sensitive to interest rates.
Bitcoin’s correlation to gold has declined, while it has increased significantly when correlated to stocks, particularly interest rate-sensitive stocks like growth stocks.”
CoinShares also referred to Bitcoin as “both a growth stock and an emerging store of value” and thus predicted that the comparable similarities to stocks would diminish over time.
The analysis concludes that
“Unfortunately, although there are many unknowns, we believe that the US and the rest of the world are likely to slide into economic decline in 2023. Maybe it’s stagflation, which then turns into a recession? With the liquidity trap really taking hold of central bankers, we believe bitcoin is a good insurance policy in the face of this monetary policy mess.”
Source: CoinSharesDon’t miss a thing – Sign up to receive crypto email alerts straight to your inbox
Check the price action
Follow us on Twitter, Facebook and Telegram
Surf the Daily Hodl Mix
Check the latest headlines
 
Disclaimer: Opinions expressed on The Daily Hodl are not investment advice. Investors should do their due diligence before making any risky investments in Bitcoin, cryptocurrency or digital assets. Please note that you transfer and trade at your own risk and any losses you incur are your responsibility. The Daily Hodl does not recommend the purchase or sale of cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Featured image: Shutterstock/Philipp Tur/Suri Sharma
Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers
Comments are closed.