Saxo Bank’s 2018 Outrageous Predictions: Fed loses independece as US Treasury – bitcoin crashes at $1,000

Saxo Bank is deeping again this year in penning their annual list of 10 Outrageous Predictions. As usual, the bank roam the world and ride roughshod over consensus in sniffing out these supposedly highly unlikely events with underappreciated potential – events that could have tremendous implications if they come to pass.

What will shake up the markets in 2018?
1. Fed loses independence as US Treasury takes charge
Treasury enacts 2.5% yield cap after massive spike.
2. Bank of Japan abandons yield curve control
USDJPY @ 150 as yen collapses.
3. China issues CNY-denominated oil futures contract
Petro-renminbi surges, USDCNY below 6.0.
4. Volatility spikes on sudden S&P 500 ‘flash crash’
S&P 500 drops 25% in spectacular plunge.
5. US voters push left in 2018 mid-terms, bonds spike
US 30-year Treasury yields rip beyond 5%.
6. ‘Austro-Hungarians’ launch hostile EU takeover
EURUSD to 1.00 after hitting new highs.
7. Investors flee Bitcoin as governments strike back
Bitcoin @ $1,000 (-90%).
8. South Africa resurgent after ‘African Spring’
ZAR gains 30% versus EM currencies.
9. Tencent topples Apple as market cap king
Tencent shares gain 100%.
10. Women take the reins of corporate power
Female CEOs at more than 60 Fortune 500 companies.

Among the ten predictions listed the most startling of all is Saxo’s determination on Bitcoin. This suggest a peak in 2018 above $60,000 and a market capitalisation of over $1 trillion as the advent of the Bitcoin futures contract in December 2017 leads to a groundswell of involvement by investors and funds that are more comfortable trading futures than tying up funds on cryptocurrency exchanges.

„Before long, however, the Bitcoin phenomenon finds the rug torn out from under it as Russia and China move deftly to sideline and even prohibit non-sanctioned cryptocurrencies domestically,” states the bank. „After its spectacular peak in 2018, Bitcoin crashes and limps into 2019 close to its fundamental ‘production cost’ of $1,000.”

Head of FX Strategy, John J. Hardy, who lead the project this year, comments: „We may or may not get any of these right but that isn’t the point. Rather, our task here is to stimulate debate and thought on what outrageous direction things may head at major inflection points like those that 2018 will inevitably bring.“

„Our suspicion is that the complacency and low volatility in 2017 will not repeat and may indeed have stored energy for a spectacular and outrageous 2018. Thus, a number of our predictions point squarely at the risk that this accumulation of excess complacency may have blown a pent-up bubble of volatility.

But do keep in mind, as always, that these are not forecasts. Rather, they are a list of supposed “1% likelihood” events that should really be considered as 10% likely… or higher.”, the bank says.

Chief economist at Saxo Bank, Steen Jakobsen says: “It is important to underline that the Outrageous Predictions should not be considered Saxo’s official market outlook, it is instead the events and market moves deemed outliers with huge potentials for upsetting consensus views.”

Source: Saxo Bank