No one dared to talk about the potential of stagflation, the dreaded word that represents Portmanteau of stagnation and inflation, in the World Economic Forum in Davos earlier this year despite the imminent Trump tariff and the commercial war.
However, investors have recognized the risk of S words, leading to higher performance to the strategies related to stagflation in relation to the purchase and retention bitcoin and the S&P 500.
Since last week, the “stagflation basket” of Goldman Sachs, which is committed to force in basic products and defensive works, such as medical care and shorts in consumer discretion, semiconductors and non -profitable technological actions, increased almost 20% during the year.
The S&P 500 S&P, the Benchmark Equity Index of Wall Street, has fallen 4% this year, with Bitcoin, the leading cryptocurrency by market value, 10% less, according to the data source source of the data source and Coindesk.
The International Monetary Fund defines thisffation as a situation in which high inflation coincides with economic stagnation, high unemployment and a general decrease in economic activity.
“It seems that stock and bond prices are adjusting for lower growth and greater inflation [stagflation] – Although, there are other factors at work here: medical care, for example, it is very likely that it benefits from the promise of deregulation that compensates for direct fund cuts, “said Noelle Acheson, author of the crypto is Macro Now Bulletin, COINDESK.
Standing murmurs have been heard since the beginning of 2022, but the markets have begun to set the price of this year, mainly due to Trump rates and the growing commercial tensions.
Inflation metrics with future vision such as two -year and five years swaps increased to maximum of several years, a sign of fear of a commercial war that makes consumption more expensive. Meanwhile, a key section of the treasure market yield curve recently became investment, indicating a recession ahead. Several GDP traders in real time, such as the GDP of the Atlanta Fed, have indicated a strong contraction in economic activity.
BTC failed as digital gold?
A possible stagflation is a perfect situation for assets with a perceived warehouse of value appeals, such as Bitcoin to shine. Keep in mind that gold has won 13% this year.
However, the case of bulls in the cryptocurrency proposed by its holders for years has not materialized. In fact, BTC’s correlation with US actions has been strengthened in recent weeks.
That does not necessarily mean that BTC is no longer a safe shelter, according to Noelle Acheson, author of The Popular Crypto Is Macro Now Newsletter.
“BTC is a short -term risk asset with the prices established by the last short -term trade: in the long term, it is a safe shelter given its verifiable hard capitalization and its global usefulness: these days, the market is in a statement of risk, so that the macro lighting portfolios, and we have not yet seen the new entries necessary to obtain the stage of your career, this could take some time, since the uncertainty is a right A successful for professionals to be more retail.
He explained that tail winds remain intact and once the market fits the new economic landscape, cryptography market tickets will probably resume.
“The tail winds remain intact, with the propagation of education, the new online institutional services and the jurisdictions worldwide elaborate regulatory frameworks with which the institutions will feel comfortable (and through them, the general retail sale),” said Acheson.
Erroneous
Markus Thielen, founder of 10x Research, offered a slightly different take, saying that the market is wrong when reading the situation as stampening.
“What we are probably seeing is a frontal load of tariff impacts, promoting a temporary increase in the demand for basic products that should fade in the coming months. In addition, the uncertainty that Doge surrounds is weighing growth expectations,” Thieen told Coindeesk.
He added that a possible Fed Fed tone at the end of this week could relive a bullish mood in risk assets, including BTC. Last week, Trump stopped a plan to double US tariffs on Canadian steel and metal imports at 50%. The Fed is scheduled to announce its rate review on Wednesday.
“Recent Trump comments that suggest a possible softening of aggressive commercial policies combined with a possible slightly misleading tone of the Fed this week could prepare the scenario for a rebound in assets oriented to growth. Historically, betting on prolonged stagflation has rarely been a winning strategy in the last 40 years,” Thielen said.
