Bank of America Market Strategist Says ‘Summer Rally Is Over’ With Cryptocurrencies and Stocks Lower Ahead of Fed Rate Raise This Week – Bitcoin Economics News

Cryptocurrency, precious metals and stocks markets fell again on Monday after the markets plunged last Tuesday. Last week’s fall was one of the worst in more than three months, with market experts believing a big Fed rate hike is coming this week. Bank of America analysts led by Savita Subramanian believe the US Federal Reserve “has more work to do” and an aggressive central bank “may be anathema to stocks that have benefited from low interest rates and inflation.”

Cryptocurrencies, Precious Metals, Stocks Show Volatility Ahead of Fed Rate Raise – Analyst Plan B pseudonym B says Bitcoin and S&P 500 are related but ‘completely different worlds’

Market strategists at Bank of America, led by Savita Subramanian, said in a note last weekend that a hawkish Fed could be like a pusher or kryptonite for assets that benefited from easier monetary policy and stimulus. Global assets got off to a rough start on Monday as all four major stock indexes on Wall Street started the day (9:30am) lower after a horrific week of trading activity last week. By 3:00 p.m. ET, benchmark stocks experienced a slight rebound that showed extreme market volatility and uncertainty.

Subramanian and his team expect the S&P 500 to lose another 8% this year, and further emphasized that “the summer rally is over.” On Monday, the cryptocurrency markets are down 1.61% in the past 24 hours, and the crypto economy is now just above $900 billion at $933.17 billion. Bitcoin (BTC) has lost 1.67% and Ethereum (ETH) is down 1.79% against the US Dollar in the past 24 hours.

Precious metals such as gold and silver saw losses on Monday as well, with gold down 0.12% and silver down 0.74% against the dollar. Bitcoin markets are closely correlated with US stocks, but some Bitcoin market analysts believe that Bitcoin is an entirely different animal.

“[Bitcoin] and the S&P 500 are interconnected,” the analyst with the pseudonym Plan B chirp on Monday. However, in the same period that S&P increased from ~$1,000 to ~$4K, [bitcoin] It jumped from about $10 to about $20,000. 4x vs 2000x… completely different worlds. Short-term moves are noise, long-term trends are the signal.”

Bank of America's market strategist says 'summer rally is over' with cryptocurrencies and stocks lower ahead of this week's Fed rate hike
The chart was shared by Plan B on September 19, 2022.

Market Strategists at Bank of America: ‘Fed Has More Work to Do’ – Dollar Jumps Higher, 10-Year Treasuries Click 11-Year High

Meanwhile, economists and analysts believe the Federal Reserve will raise its target federal funds rate by 75 basis points this week. Bank of America’s Subramanian described “the Fed has more work to do” and lessons learned from more than four decades can tell us a lot about fighting inflation.

“A hawkish Fed may be anathema to stocks that have benefited from low rates and low inflation (i.e. most of the S&P 500), but lessons from the 1970s tell us that early easing could lead to a new bout of inflation — and that market volatility explains the note from the strategist at Bank of America says that in the short term, there may be a lower rate to pay.Subramanian’s opinion comes on the heels of a report released by Bank of America economists in mid-July.

At the time, the bank’s economists said it had previously forecast “stagnation in growth,” but the summer forecast pointed to a “moderate recession in the US economy this year.” On Monday, market analyst Sven Henrich quoted Federal Reserve Chairman Jerome Powell’s statement during a press conference last June, when Powell said: “Obviously, a 75 basis point increase today is extraordinarily large, and I don’t expect moves of this magnitude to be common.” Heinrich then mocked the Fed chief by pointing out that the central bank is proceeding with its third rate hike of 75 basis points in a row.

While almost every asset class shows a strong correlation with inflationary pressures and monetary policy of the Federal Reserve, the US dollar continued to rise against other fiat currencies. US Dollar Currency Index (DYX) is trading at 109.756 on Monday afternoon (ET) and the Euro has reached parity with the Dollar once again. One Japanese yen is equal to $0.0070 per yen, and the 10-year US Treasury note hit an 11-year high of 3.518% on September 19.

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What do you think the market strategist at Bank of America thinks of the hawkish Fed and the S&P 500 that gave up another 8% by the end of the year? Tell us what you think about it in the comments section below.

Jimmy Redman

Jamie Redman is the head of news at News and a technology financial journalist based in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for News about the disruptive protocols emerging today.

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