Golden Finance reported that Bank of America expressed the view that there are many uncertainties in current trade policies and the high debt level continues to put pressure on the US dollar. Judging from high-frequency data, the economy shows signs of a possible slowdown. With the combined effect of this series of factors, it is expected that the US dollar will have the possibility of further decline this summer.
Meanwhile, inflation expectations keep rising. Due to this restriction, the Federal Reserve finds it difficult to take major actions. Bank of America believes that the downward trend of the US dollar might benefit assets denominated in US dollars such as gold and Bitcoin.
As a major global reserve currency, the exchange rate fluctuations of the US dollar have a profound impact on various assets. In terms of trade policies, international trade frictions have been continuous and tariff adjustments have been frequent. This has made the global trade situation shrouded in mystery, and investors’ confidence in US dollar assets has also been unstable as a result. The high debt level within the United States is like a time bomb, constantly threatening the stability of the US dollar. Once economic growth slows down, the market demand for the US dollar may decline, and the US dollar exchange rate will naturally be under downward pressure.
Gold, as a traditional safe-haven asset, has seen its value preservation function become increasingly prominent in the context of a falling US dollar and an uncertain economic outlook. Past experience shows that when the US dollar weakens, investors tend to shift some of their funds to the gold market, seeking a safe haven for their assets, which in turn drives up the price of gold.
Since its inception, Bitcoin has been regarded by some investors as “digital gold”, featuring decentralization and a limited total supply. As the cryptocurrency market gradually develops and matures, an increasing number of investors are incorporating Bitcoin into their asset allocation portfolios. During the period of the US dollar’s decline, Bitcoin may, with its unique attributes, attract the attention of investors seeking alternatives to US dollar assets, thus ushering in an opportunity for its price to rise. This statement from Bank of America offers investors new ideas and directions for asset allocation in the current complex financial market environment. How the market will move in the future is worth continuous attention.
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