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.
Alex is Editor-in-Chief of Coindoo and co-founder of Millennial Media Group, with nearly a decade of experience covering financial markets - crypto first, then everything else. It started in 2016 with Bitcoin. Like most people at the time, he didn't fully understand it - so he kept digging. Blockchain, tokenomics, the projects, the cycles. That curiosity never stopped, and eventually pulled him into traditional markets too: equities, commodities, macro. Not because he left crypto behind, but because you can't properly understand one without the other. What drives him is straightforward: he wants to know why something is happening, not just that it's happening. Most market coverage stops at the headline - price up, price down, here's a chart. Alex finds that kind of reporting actively unhelpful. If you walk away from an article without understanding the mechanism behind the move, what did you actually learn? He holds a degree in Tourism from New Bulgarian University - not the most obvious path into financial markets, but markets have a way of pulling in people who are simply too curious to stay out. He has authored over 200 in-depth analyses and more than 10,000 articles across crypto and traditional finance. He still thinks every day in markets teaches him something new. That's probably why he hasn't stopped.
