Bank of America Predicts Crypto Token Price Divergence in 2023: What Does it Mean for Investors?

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.

Bank of America Predicts Crypto Token Price Divergence in 2023: What Does it Mean for Investors?
Bank of America Predicts Crypto Token Price Divergence in 2023: What Does it Mean for Investors?

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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