Bank of America Strategist Predicts Limited Near-Term Rally for Cryptocurrencies

Bank of America Strategist Predicts Limited Near-Term Rally for Cryptocurrencies

Bank of America strategist Alkesh Shah has expressed a bearish outlook on cryptocurrencies in the near term, citing macroeconomic challenges and regulatory uncertainty. Shah noted that cryptocurrencies, along with other risk assets, are likely to remain subdued as macro dynamics continue to weigh on investor sentiment.

Macro Economic Pressures and Lack of Direction

Token flows in the cryptocurrency market remain directionless, with limited conviction among investors. Shah attributes this to broader macroeconomic factors, including high inflation and interest rate hikes, which have impacted high-growth, risky assets throughout 2023. The strategist emphasized that the risk of lower-than-expected profits is further pressuring risk assets across the board.

Regulatory Framework Delays

Shah also highlighted the absence of a comprehensive U.S. regulatory framework for digital assets as a significant barrier to mainstream adoption. While regulatory clarity is viewed as critical for driving institutional and individual engagement with cryptocurrencies, Shah believes such a framework is unlikely to materialize in the near term. Current proposals, according to Shah, still lack the necessary comprehensiveness to support widespread adoption.

Current Market Impact

Bitcoin's price has reflected these challenges, dropping over 1.5% today. Shah's analysis suggests that without significant macroeconomic relief or regulatory progress, cryptocurrencies may struggle to gain momentum in the coming months.