Crypto Market Near-Term Upside Is Likely Capped: Bank of America
The bank expects digital asset trading volumes to remain subdued, with retail investors remaining on the sidelines.
:format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/5JOYL3NLV5BK3GHZX475I4QQS4.jpg)
Bank of America (Taylor Simpson/Unsplash)
/arc-photo-coindesk/arc2-prod/public/LXF2COBSKBCNHNRE3WTK2BZ7GE.png)
There is limited upside for cryptocurrency markets in the near-term, Bank of America (BAC) said in a research report Friday.
“Low conviction, limited catalysts and outperformance year-to-date leave the digital asset sector stuck in a trading range with a challenging macro backdrop likely capping digital asset upside,” analysts Alkesh Shah and Andrew Moss wrote.
The bank says conversations with clients suggest that hedge funds are returning to token trading, “with momentum strategies likely benefitting to some extent from heightened volatility due to declining trading volumes.”
Momentum investing is when investors buy assets that are rising and sell them when they appear to have peaked, using volatility to identify buying opportunities in short-term uptrends and then selling when momentum appears to be waning.
Bank of America says it expects cryptocurrency trading volumes to remain subdued, with retail investors remaining on the sidelines.
Traditional finance (TradFi) companies and tech firms continue to build blockchain applications focused on tokenizing demand deposits, repo settlements and bond issuance, the report added.
Disclosure
Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish, a cryptocurrency exchange, which in turn is owned by Block.one, a firm with interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets including bitcoin and EOS. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.
Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.