Bank of America published a research report on Friday, stating that it expects a limited upside for cryptocurrency markets in the near term.
Analysts Alkesh Shah and Andrew Moss said:
"Limited catalysts and the performance exhibited since the beginning of the year are squeezing the digital asset sector between a macro environment that constrains upward movements of assets and a trading range."
The bank states that hedge funds have turned to token trades based on discussions with clients. It also claims that momentum strategies have capitalized on increased volatility due to declining trading volumes.
Momentum investing refers to investors buying rising assets and selling them when they appear to have reached their peak, using volatility to identify buying opportunities in short-term upward trends and selling when momentum appears to wane.
According to Bank of America's report, traditional finance (TradFi) companies and technology firms continue to develop blockchain applications that tokenize demand deposits, repo settlements, and bond issuance.
