Bank of America’s crypto users slump by 50% in bear market

Bloomberg

The number of active cryptocurrency users at Bank of America has declined by more than half amid the prolonged rout in the digital-asset market.
The bank’s crypto users shrunk to below 500,000 in May from more than 1 million in November 2021, when Bitcoin and some other tokens hit all-time highs. Since then, crypto prices have cratered, with sentiment among fans also souring. Bitcoin has tumbled nearly 60% this year and is trading just above $19,000. The bank said there has been “a grave decline” in prices.
The bank looked at anonymised internal customer data that showed the number of clients who had made investments in crypto assets by sending or receiving a payment to or from a digital-asset platform, though the data doesn’t show what specific transactions were made. While Bank of America’s data doesn’t offer a comprehensive view of all crypto users, it can be reflective of broader trends in the space.
Cryptocurrencies, like other riskier assets, have suffered in a tighter monetary-policy environment, where the Federal Reserve and other central banks are raising interest rates to slow down growth and dampen rising prices. The market capitalisation of cryptocurrencies has dropped to less than $1 trillion, from a peak of about
$3 trillion in November 2021.
Amid these conditions, sentiment toward digital assets has also fallen. Between April and June, Bank of America saw a rise to 30% from 21% in those saying they haven’t invested in the space and have no plans to do so.
Still, the wider effects of the crypto-market slump might not be detrimental to the broader economy. Crypto assets comprise less than 1% of overall US household financial assets, Bank of America said, suggesting that “relatively few people view crypto assets as a reliable long-term investment.”

BofA Says Brace for Recession Shock
A “recession shock” begins for markets following the worst first-half for the S&P 500 in more than 50 years, Bank of America Corp’s Chief Investment Strategist Michael Hartnett says.
While expectations of aggressive rate hikes by the Federal Reserve are peaking, inflation expectations are not, and Bofa’s bull and bear indicator remains at “maximum bearish” for a third week in a row, Hartnett wrote in a note.
Both stocks and bonds were rocked by outflows this week as investors fear the global economy could contract amid runaway inflation and hawkish central banks. About $5.8 billion exited global stock funds in the week through June 29, although US equities saw small inflows of about $0.5 billion, BofA said, citing EPFR Global data. Bonds had redemptions of $17 billion, the data show.
Markets have been roiled this year as investors dumped risk assets on worries of a looming recession while inflation remains sticky even as central banks kick off aggressive rate hikes. Stocks and bonds around the world combined have fallen by the most on record, according to Bloomberg data going back to 1990, with more than $8 trillion wiped off the S&P 500 Index alone in its worst first-half performance in over half a century.
Other seemingly bullish strategists broadly expect stocks to at least partially recover in the second half, according to Bloomberg surveys. But the likes of Michael Wilson at Morgan Stanley have warned of more declines until the market finds a bottom. Goldman Sachs Group Inc. strategists said on Friday that the risk of a renewed selloff in equity markets is still high as investors are only pricing a mild recession.
The upcoming earnings season is also going to be crucial for investors to gauge the impact of high prices and weaker consumer sentiment on corporate profits.