Bank of America believes that digital assets are one of the effective tools for hedging inflation risks

Cryptocurrencies, as well as commodities and cash, are able to show positive dynamics in comparison with securities amid threats associated with inflation, recession and the Fed rate. This opinion is shared by Bank of America strategist Michael Hartnett.

The investment bank believes that stock market players need to prepare for the fall of the S&P 500 index below 4,000 points by the end of this year. This is a signal of a possible fall from 11% from today’s levels.

According to the analyst, the current inflation is “out of control.” Prices are rising at a pace that has not been observed over the past 40 years.

“Inflation will trigger a recession. Almost all such episodes in the past preceded it […]. Expectations of higher yields [in the government debt market] and a weaker dollar have increased the likelihood of a downturn in the economy,” Hartnett said.

He believes that in the wake of an inflationary shock, one should prepare for shocks related to interest rates and a recession.

But the former co-founder of BitMEX, Arthur Hayes, suggested that the cryptocurrency market is going to fall in June this year. The crypto enthusiast predicts that by the end of Q2, BTC and ETH could reach $30,000 and $2,500, respectively. The businessman predicts that this will happen due to the fall of the Nasdaq 100 index, with which digital currencies are usually correlated.

“There is nothing scientific in these figures, except for intuition. Annoyingly, there is a number of altcoins that I started to accumulate because of the rather attractive prices. Despite some of them falling 75% from their all-time highs, I don’t believe they will escape the coming crash. Thus, I bet on the fall of Bitcoin and Ethereum in June 2022,” Hayes believes.

However, he did not rule out that his assumption may turn out to be erroneous if the relationship between crypto assets and NDX falls before the announced deadline. At the same time, Hayes emphasized that he himself prefers long positions in digital currencies.

“There are many experts who believe that the worst is over. I believe they are ignoring the inconvenient truth that crypto capital markets are currently just 24/7 indicators of the S&P 500 and NDX and do not trade the fundamentals of peer-to-peer, decentralized, censorship-resistant digital money transfer networks,” he concluded.

What do you think, is the crypto market waiting for a significant drop?