Slowing Macroeconomy Could Be A Boon For Bitcoin & FAANG Stocks
Since 2018’s bear market came to life, investors have tried to determine what will revive Bitcoin (BTC) once again. According to industry researcher boutique Delphi Digital, the strength (or lack thereof) of the macroeconomy could be a boon for the cryptocurrency market moving forward, in spite of the fact that many pundits see digital assets as independent of traditional systems.
Bitcoin Could Catch Investors Looking For “Significant Price Appreciation”
Per an excerpt from the New York-based group’s most recent report, a potential rise in growth investing strategies (throwing money at firms with strong growth upside to maximize capital gains) could aid Bitcoin in the coming months and years. Delphi’s analysts explain that growth-centric investors’ most popular choices include the stocks that consist of FAANG along with other hot Silicon Valley firms.
3/ Given the outlook of slower economic growth and subdued earnings forecasts, the backdrop appears favorable for growth to outperform. If so, #bitcoin may be poised to catch a bid as investors reach for riskier assets with significant price appreciation potential. $BTC pic.twitter.com/6MvZauouty
— Delphi Digital (@Delphi_Digital) April 12, 2019
The reason why this is significant is that in periods of slow economic growth and subdued earnings, which economists are calling for, growth stocks, meaning Bitcoin in turn (correlation), often outperform their peers. Thus, Delphi concluded:
“Given the outlook of slower economic growth and subdued earnings forecasts, the backdrop appears favorable for growth to outperform. If so, bitcoin may be poised to catch a bid as investors reach for riskier assets with significant price appreciation potential.”
Perfect Storm For Bitcoin Is Approaching
Delphi’s talented researchers aren’t the first to have claimed that factors in the macroeconomy could boost Bitcoin over the coming months. As reported by NewsBTC previously, Brendan Bernstein, the founding partner of Tetras Capital, an industry investment firm whose partners seem skeptical of Ethereum, recently laid out why he believes BTC’s long-term prospects are healthy.
He remarked that the U.S. Federal Reserve’s decision over the past decade to enlist quantitative easing (QE) strategies could aid BTC. Here’s why.
While QE, which is a fiscal policy that sees central banks purchase assets to boost the economy, has arguably been a positive catalyst for cryptocurrencies for the better part of a decade, some fear that the economy might get dicey (asset inflation, fiscal instability, etc.). Anti-establishment figures, presumably like Bernstein and Ikigai’s Travis Kling, are wary that with the overutilization of QE, the economy could be put in a bad place, potentially giving BTC a chance to rally as a non-correlated store of value.
Bernstein continued on the theme that macroeconomic and political factors may give a decentralized, digital currency a chance to outperform by drawing attention to democratic socialism, modern monetary theory, a growing retired yet financially stunted population, and the rapidly swelling amount of U.S. sovereign debt. He claimed that all this, coupled with QE, is why there is a “perfect storm for BTC right now.”