Bank of America: Crypto investors switch to stabelcoins as market crisis continues

Bank of America experts have recorded more cautious behaviour among crypto investors due to uncertainty about market trends.

According to Bank of America (BofA), crypto investors increasingly prefer to work with staplecoins pegged to the US dollar or gold, as the volatility of digital assets is still too high and the end of the crisis in the cryptocurrency market is yet to be seen. Also, experts say, investors are concerned about the prospect of a prolonged recession in the US.

Although the price of most assets, including digital assets, has risen markedly from its June lows, the unpredictability of the Fed’s actions is forcing investors to play more cautiously. If high interest rates persist for an extended period of time, the crypto industry could pull back, BofA analysts said.

Risky assets, including cryptocurrencies, are likely to experience a classic rebound after a prolonged recession, analysts say. The bank has conducted a token flow analysis, which shows that the momentum from buying digital assets is waning and investors are moving into a defensive stance by stocking up on stabelcoins. Some investors suggest the current situation is a short-term respite before a more prolonged recession.

According to experts, the planned merger of the Etherium network at the end of September will be an important development for the cryptocurrency industry, as it should remove one of the major obstacles to the adoption of blockchain-based applications – reducing the power consumption of the network by 99%, giving way to wider adoption of NFT and stablcoin.

Earlier, the bank published data showing that the number of active cryptocurrency users has fallen by more than 50% from its November peak.