A Wall Street strategist breaks down why bitcoin’s latest surge past $18,000 is sniffing out a major downward spiral in the stock market’s hottest trade

• The promise of a vaccine-led recovery has recently lifted value stocks and other assets that benefit from economic improvement. 
• Bitcoin has also ridden the bullish wave as investors bet that the cryptocurrency, like gold, will be an adequate hedge against inflation. 
• These prospects are still outweighed by the risk of a second COVID-19 wave and a sudden reversal of sentiment among investors, warns Societe Generale’s Albert Edwards.

Just a few months ago, experts were warning that investors who overlooked the risk of inflation were doing so at their own peril. 

And who could blame the unbelievers? After all, the longest expansionary cycle in history and trillions worth of monetary stimulus had failed to meaningfully move the needle on inflation.  

But the tone has changed of late. These days, the prospect of inflation — an improvement in economic growth and wages that leads to higher consumer prices — is widely accepted.