Hartnett: ‘Dollar entered 4th bear market in last 50 years’

When the US dollar flexed its muscles in October 2022 and hit an all-time high, Bank of America’s Michael Hartnett came up with a conflicting analysis. According to Hartnett, it was a good idea at the time to invest in the hard-hit emerging economies and sell the overconfident America. Simply put, buy emerging economies, short the dollar.

Hartnett’s right

So far, Bank of America’s chief strategist has been proven right with his analysis. In a new story called “Sugar Coated Iceberg,” Hartnett writes that the last strong period of the US dollar is over and that the market’s new favorite theme is suddenly the devaluation of the US dollar.

bear market

Since September, the US dollar has lost 11 percent, gold shot past $2,000 and Bitcoin is back at $30,000. In addition, the US government deficit is increasing, the debt mountain has grown to a record and there are serious geopolitical tensions.

“As the US dollar heads into its fourth bear market in 50 years, it is bullish for gold, oil, the euro and international equities,” Hartnett said. However, the pessimism surrounding the US dollar is now so high that Hartnett advises waiting for the bounce in the dollar before you really short it.

What does this mean for Bitcoin?

Hartnett believes the US dollar is facing a difficult period as the US government deficit is through the roof this year, the mountain of debt is rising sharply and a possible recession means that the Federal Reserve must quickly apply the brakes.

In other words: there is a chance that a lot of printing will have to be done to keep things going in the coming period. In that respect, he sees scarcity as an important safe haven and that may make Bitcoin’s absolute scarcity of 21 million units interesting.

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It is not for nothing that Bitcoin has already risen from $ 15,500 to the current price of about $ 30,000 in recent months. We may see a brief rebound in the US dollar at the start of the recession, making it interesting to invest in short-dated government bonds, which now offer a yield of about 5 percent, before fleeing to scarcity.

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