Since March last year, when the world was rocked by the dramatic market crashes triggered by the Covid-19 pandemic, the tendency to shy away from risky investments became prevalent. However, as we begin to observe signs of economic recovery, many investors are reassessing their stance.
In the US, a major hub for finance and investment, government response to the Covid-19 crisis has been closely monitored. The Biden administration not only rolled out a new stimulus package but also proposed an ambitious $2.2 trillion infrastructure plan.
PrimeXBT analyst Kim Chua highlights that, following a temporary downturn due to fluctuating yields affecting riskier assets, markets are regaining confidence after the announcement of Biden's $2.2 trillion infrastructure initiative.
This planned spending, which will once again involve printing more USD, is anticipated to devalue the dollar and stabilize yields. After recent relief efforts distributing $1.9 trillion, the approval of this infrastructure plan would not only boost market optimism and risk assets but also contribute to inflation, driving asset prices higher.
The upturn in employment suggests increased consumer spending, resulting in higher corporate revenues due to elevated economic activity and consumption. These factors collectively indicate a bullish trend in stock values along with a significant appreciation in cryptocurrency prices.
The S&P 500 has already sailed past 4,000 points buoyed by this positive momentum, and I foresee a substantial surge by September. For cryptocurrencies, this climate is ideal, possibly setting the stage for Bitcoin to reach $100,000 and Ethereum $3,000.
While the upward trajectory in traditional markets is encouraging, it's the vibrant growth in cryptocurrencies, despite their perceived volatility and risk, that stands out. A growing appetite for risk may further drive digital assets forward in the months ahead.
About Kim Chua, PrimeXBT Market Analyst:
Kim Chua is an institutional trading specialist with a track record of success that extends across leading banks including Deutsche Bank, China Merchants Bank, and more. Chua later launched a hedge fund that consistently achieved triple-digit returns for seven years. Chua is also an educator at heart who developed her own proprietary trading curriculum to pass her knowledge down to a new generation of analysts. Kim Chua actively follows both traditional and cryptocurrency markets closely and is eager to find future investment and trading opportunities as the two vastly different asset classes begin to converge.
