JPMorgan Chase, $362 billion banking giant has predicted a 60 percent possibility for the next US slump to happen by 2020. In case of a global market recession, can crypto serve as a feasible alternative to existing stores of value?
“The probability of a U.S. recession within one year is almost 28 percent, and rises to more than 60 percent over the next two years, researchers wrote in a note this week. Over the next three years, the odds are higher than 80 percent, according to the note,” Bloomberg announced.
The Federal Reserve Bank of New York reports that there is already a small 14.5 percent possibility of depression happening by the end of 2019, which is a clear difference from that made by JPMorgan’s 60 percent chance by 2020.
The difference stems from the complicated model of JPMorgan that tracks almost every indicator that could add to the global economy. Some of the indicators are compensation growth, consumer and business sentiment, and labor participation.
Stephen Stanley, chief economist at Amherst Pierpont, proposed that 2020 could be described as an early stage for the next US depression to happen but he made a similar statement to JPMorgan in that while the US economy is still strong with low unemployment rate and a bull market, the risk of a depression in the years to come is possible.
Usually, most economists in the US predict a depression to happen in the next two to three years. David Altig, Federal Reserve Bank of Atlanta research director and NABE’s survey chair, revealed that two-thirds of business economists in the US presume the market will collapse by the end of 2020, mainly as a result of trade problems.
“Trade issues are clearly influencing panelists’ views,” Altig noted, explaining that trade issues and high-interest rates levied by the Fed leave US markets vulnerable to a mid-term crash.
The demand for crypto has increased significantly at a time when economists predict a market collapse and a significant depression in the next two years.
Although not shown by the prices of top cryptocurrencies, financial institutions including Fidelity, Goldman Sachs, and Citigroup have created the infrastructure to target institutional investors who intend to invest in the digital asset market.
According to Jim Hamel, portfolio manager at Artisan Global Opportunities Fund, the payments industry has gone through exponential development in recent years, which could naturally drive investors to cryptocurrencies.
“There are a number of tailwinds contributing to this trend. First, we’re seeing rapid growth in e-commerce, which requires that customers be able to make secure digital payments. The growth in cross-border transactions and the general impact of an increasingly globalized marketplace are helping accelerate this trend.”