Analysts Warn Against Elimination of Middle Class; Can Bitcoin Help?
The economic situation in the United States has worsened in recent times, and has recorded inflation rates not seen in 40 years. Given this, the Fed obviously has its work cut out for them, and they have reportedly started taking action against it. Fed Chairman Jerome Powell had given a speech just over a week ago in which he had described the Fed’s position as “hawkish” and warned of “pain” to come as measures are put in place.
Market strategists warn of the consequences
The Fed has not exactly been shy about what the consequences of the high inflation rates and the Fed’s stance will be. The Fed chief had explained that it would take some time to fix the economy and normalize price volatility, and let everyone know that there would be a price to pay for this.
One of the “pains” expected to be felt was recently highlighted by market strategist Todd ‘Bubba’ Horwitz. Horwitz, who is a market strategist at Bubba Trading, painted a pretty grim picture based on the Fed’s stance in a recent interview with Kitco.
The strategist explains that the stock markets will be a bit tough as the stock market could register another 50% decline. He explained that this is all part of a plan to create the “Great Reset.” A side effect of this reset would be that the middle class would be completely eliminated.
BTC trading below $20,000 | Source: BTCUSD on TradingView.com
Horwitz referred to Powell’s comments as “those of an idiot,” pointing out that the worst is yet to come. “Wait until the price of oil starts to skyrocket again,” Horwitz said. “What do you think will happen to inflation then? We are going to have a food shortage this year. We will have food riots in many countries.”
Is Bitcoin the answer?
In the past, bitcoin has been able to perform quite independently of the stock markets. However, with the increase in institutional adoption, the line between the performance of bitcoin and the stock market has become blurred.
The correlation between bitcoin and the stock market is higher than it has ever been, meaning that whatever affects the stock market is likely to spill over into the price of bitcoin. But the digital asset still remains free from the control of any centralized body, making it a better option in times when major problems are predicted for the market.
For bitcoin to be a viable alternative, if Horwitz’s predictions are correct, it will have to break the current correlation and start moving on its own. In this way, the price will be determined exclusively by supply and demand instead of what happens in the stock market.
Last year, BTC’s performance was much better than the top stocks, but this was when the correlation was much lower. However, bitcoin has often proven to be a better option against high inflation due to its decentralized nature.
Featured image from BBC, chart from TradingView.com
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