Bitcoin, stocks and commodities to rally as Fed forced to pivot and resume money printing: Coin Bureau
A popular crypto analyst is creating a macroeconomic forecast to see what the future might hold for risky assets like Bitcoin (BTC).
In a new strategy session, Coin Bureau’s pseudonymous host, known as Guy, notes that historically, periods of high inflation have lasted about three years, which could provide clues as to when the financial landscape might change.
“One can only guess when inflation will fall, but history shows that periods of high inflation last about two to three years at a time, at least in the United States.
Not surprisingly, this coincides with the length of Fed interest rate cycles, which also last two to three years each…
“The scary thing is that what has historically brought down inflation hasn’t been the Fed’s rate hikes, but rather the recessions that those rate hikes caused.
As the saying goes, history doesn’t repeat itself, but it does rhyme. This means we are likely to experience a similar economic downturn in the coming months.”
Due to geopolitical conflicts in Eastern Europe, Guy speculates that localized production will keep prices high for consumers, and risky assets like cryptocurrencies could be hurt by this reshaped landscape in the short-term but remain strong in the long-term.
“The world seems to be in the process of deglobalization, which means that more and more production will take place at home, or at least closer to home. The consensus seems to be that this will cause the prices of certain goods and services to remain 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 over the long term, but it won’t help much in the short term while the Fed’s rate hikes prompt investors to dump money from risky assets to pay down debt.”
The analyst says that while most asset classes will be flat during a recession, he believes stocks, cryptocurrencies and perhaps commodities will reward investors over the long term if they weather the impact of inflation.
“It’s also unclear how crypto will handle a recession, but given crypto’s high correlation with tech stocks, it’s reasonable to assume it probably won’t be pretty.
The silver lining to this situation is that the Fed will inevitably change course, as it always does. This will eventually lead to stocks, cryptocurrencies and potentially commodities rallying and fulfilling their role as long-term inflation hedges.”
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