Bank of America: Trump’s Policy Shift Could Trigger Crypto and AI Market Bubble
According to a report from Bloomberg, Bank of America strategists are warning that President Donald Trump’s recent policy reversal—favoring tax cuts and easing tariffs—could ignite another wave of speculative activity across financial markets, particularly in cryptocurrency and artificial intelligence sectors.
Bloomberg cited a note from BofA’s Michael Hartnett and his team, who argued that the shift in economic approach may prompt traders to rotate out of bonds and re-enter high-risk assets. They caution that this behavior mirrors the lead-up to previous financial bubbles, and could destabilize what had been a more balanced market.
The strategists highlighted how typical market dynamics reverse in euphoric phases. “Nothing screams bubble more than equities driving nominal and real yields higher,” the report quoted Hartnett as saying. Historical data supports this concern—bond yields climbed in 12 of the last 14 asset bubbles, Bloomberg reported.
Adding to the concern, the 30-year U.S. Treasury yield has recently exceeded 5%, following Moody’s downgrade of U.S. credit and rising fears over escalating government debt levels. Meanwhile, tech-heavy indexes such as the Nasdaq 100 have surged nearly 10% in May, positioning the market for its strongest month since 2023, Bloomberg noted.
According to the same Bloomberg article, Bank of America believes Trump’s policy adjustments are already fueling a rebound in Bitcoin and equities after the April downturn. The report stated that BofA sees up to a 30% gain in the “Magnificent Seven” tech stocks before a potential market top.
While the strategists maintain their base-case preference for bonds, gold, and international equities in 2025, they acknowledge that the Trump-led bullish scenario presents a significant upside risk to that allocation strategy. They recommend a barbell approach—pairing high-growth U.S. tech leaders with global value stocks—as a hedge against a possible speculative bubble.
Alexander Stefanov
Reporter at Coindoo
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over 8 years of experience covering the crypto, blockchain and fintech industries, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics.
