Bitcoin (BTC) and other bulls will not benefit from a major change in US inflation policy in 2023, an analyst says.
In a Twitter thread On December 20, Jim Bianco, head of institutional research firm Bianco Research, said the Federal Reserve would not “pivot” on rate hikes next year.
Bianco: Japanese YCC movement “imports to all markets”
In light of the surprising tightening of the Bank of Japan’s yield curve control, analysts have turned even more bearish on the outlook for risky assets this week.
As Cointelegraph reported, the move was an immediate pain for the US dollar, and with the Wall Street open in the offing, equity futures were trending lower as of this writing.
For Bianco, the fact that the Bank of Japan was trying to follow in the footsteps of the Federal Reserve in tightening its monetary policy to avoid inflation meant that the Federal Reserve was unlikely to ease its own monetary policy.
“Again, if the BoJ is changing their policy NOW due to inflation, remind me why the Fed would pivot anytime in 2023,” read part of one post.
“The answer is they won’t. They can forget about a pivot.”
The true tangible consequences of Japan’s decision may not be felt until later, Bianco continued. With rising bond yields, Japan should attract capital home and away from the United States.
“Dollar is crushing against the yen (or yen is soaring against the dollar). Japan returns to profitability. That should bring funds back to Japan,” he wrote.
A return to lower interest rates is a key eventuality that is being priced in by markets beyond cryptocurrencies, and this is something that simply isn’t paying off anymore, Binanco said. Even though BTC/USD is already down almost 80% in just over a year along with the Fed’s quantitative tightening (QT), the pain may still be far from over.
“Powell is a hawk,” he concluded, referring to Fed Chairman Jerome Powell’s speech last week in which he tried to steer markets away from anticipating any policy easing.
“ECB President Legarde (Madam Laggard) is now speaking in a hawkish tone. Kuroda and the Bank of Japan (now) are taking actions that show concerns about inflation. Markets may have to rethink their view on the turnaround of the central banks”.
Fidelity executive warns of ‘hectic’ year
Other outlooks tried to offer a more hopeful view of the coming year, while avoiding implicitly bullish language.
Jurrien Timmer, head of global macroeconomics at asset management giant Fidelity Investments, predicted that 2023 will be a “busy” year for equities.
“My feeling is that 2023 will be a choppy sideways market, with one or more repeats of the 2022 low, but not necessarily much worse than that.” tweeted on December 19.
“Either way, I don’t think we’re anywhere near a new cyclical bull market yet.”
In later comments, Timmer added that while he believed a secular bull market had been underway since 2009, the “question is whether the secular bull market is still alive.”
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