The global financial firm and the top US investment bank, JP Morgan Chase has already predicted a recession which can hit the US economy headstrong by the year 2020. With chances as strong as 60%, can crypto be the vehicle to rescue the global market before the crash?
Why Do Experts predict a Market Crash?
While economists are dubbing the chorus of the strong American economy, lowest unemployment rates, and a bull market, they cannot exactly dismantle the threat of recession that will keep hovering for the years to come.
According to the Federal Reserve Bank of New York, there exists a mere 14.5 percent chance of a recession occurring by the end of 2019, which is a stark difference from that of JPMorgan’s 60 percent chance by 2020.
The difference comes from the intricate model of JPMorgan that tracks virtually every indicator that could contribute to the global economy. Some of the indicators include compensation growth, consumer and business sentiment, and labor participation.
Generally, the majority of economists in the US forecast a recession to occur in the next two to three years. David Altig, Federal Reserve Bank of Atlanta research director and NABE’s survey chair, disclosed that two-thirds of business economists in the US expect the market to crash by the end of 2020, mostly due to trade issues.
“Trade issues are clearly influencing panelists’ views,” Altig said, stating that trade issues and high-interest rates imposed by the Fed leave US markets vulnerable to a mid-term crash.
Is Crypto an Alternative?
Blockchain has already taken over the latest technology initiatives and crypto is on way to make an entry to the mainstream market. In fact, the tech innovators like Microsoft, who earlier asserted the ill effects of cryptocurrency are now chipping in to support crypto in the main market through Bakkt. This can be seen as an indication these leading companies are showing push crypto a bit further towards everyday dealings. So the question is, are we ready to see Crypto as an alternative?
During a period in which many economists forecast a market crash and a major recession in the next two years, the demand for crypto has increased rapidly.
While not portrayed by the prices of major cryptocurrencies, financial institutions such as Fidelity, Goldman Sachs, and Citigroup have established an infrastructure to target institutional investors planning to invest in the digital asset market.
Banks and investment firms have prevented from establishing businesses in the cryptocurrency sector due to the lack of regulatory certainty in the market. Experts have stated that the abruptly emerging trend of major financial institutions entering the crypto market suggests the demand for crypto from investors in the traditional finance sector has increased rapidly in the past several months.
“There are a number of tailwinds contributing to this trend. First, we’re seeing rapid growth in e-commerce, which requires that customers be able to make secure digital payments. The growth in cross-border transactions and the general impact of an increasingly globalized marketplace are helping accelerate this trend.” Stated Jim Hamel, portfolio manager at Artisan Global Opportunities Fund.
Image source: Google Images