Crypto and Commodities Might Perform Better Than Bonds and Stocks in Coming Months
While the global economy continues to hand on a thin line, individuals believe that crypto might overtake stocks in the next few months. According to a report from the Bank of America warning the public, there is an economic recession shock approaching. This statement comes after the Federal Reserve announced plans to shift the monetary policies within the country due the increased inflation rates.
The US Economy: An Indicator of Impending Doom
It is clear that the American economy, among that of other countries, is suffering the highest inflation rates it has seen in a while. According to NBC News in March, the inflation rate this year is up by about 7.9% and still rising. Furthermore, every month is recording nearly 0.5% average inflation rates.
While the global community can blame some of these results from the COVID pandemic, it is not the only cause of the current economic state. The recent Russian invasion into Ukrainian territory has brought another issue to life. Since then, oil prices are unimaginable, worsening the already tight living standards for people. Consequently, more everyday household items are becoming more expensive.
The Federal Reserve directed its efforts to prevent more inflation, which eventually worsened the situation. More news revealed that the body planned to cut down from its trillions of assets by a monthly approximation of $95 billion. Moreover, people expect a rise in interest rates by half-percentage point.
During the meeting held from March 17 to March 19, the Fed Reserve agreed that the proposal would probably be underway starting in May. Stocks did not perform well despite their trials to make a comeback in the market in the past few weeks after this announcement. The quantitative tightening stands as one of the toughest in the past, showing the necessary steps the Reserve is taking to battle inflation.
Could Crypto be the Answer?
Currently, many analysts are arguing that crypto might be on a better trend than stocks and bonds. During the global pandemic, crypto adoption became almost necessary, with cash exchange earning the title of a ‘health danger.’
The ongoing developments suggest that if a recession is to happen, crypto will not be shaken. The theory so far stands true as stocks plunge and cryptocurrencies try to maintain their value in the markets. Furthermore, their lack of ties to any economy directly protects the investors from a currency and its economy’s underlying issues.
As such, people have faith that once again, digital assets may be the to go to safe haven if things get worse. It does not mean that it is a sure bet that everything will work out as the crypto markets are also sticking to the red more than green.
