The bank expects that platforms that use smart contracts and are powered by blockchain will outperform meme coins and governance tokens.
The cryptocurrency market is off to a much better start this year than most had expected. According to Bank of America, the token universe is up 42% year to date to $1.1 trillion.
The bank views cryptocurrencies that power smart contract-enabled blockchain platforms, on which developers can build applications, as having the most potential for growth in the coming year. These platforms could see a price divergence in 2023, with utility and cash flow-based tokens outperforming meme and governance tokens.
Bank of America’s strategists remain cautious on growth, as strong economic data has delayed the timing of a recession and also “indicates the potential for reflation and additional rate hikes.”
“Given that January’s risk asset rally was partially driven by short-covering and mean reversion, the likely higher-for-longer rate environment may result in pressure for growth and, therefore, digital assets,” analysts Alkesh Shah and Andrew Moss wrote.
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