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The crypto market has been sluggish due to unfavorable macroeconomic conditions. The consumer expenditure data highlighted that the Fed’s hawkish stance was insufficient to curb inflation significantly. As a result, the central bank is expected to move forward with an extremely hawkish stance. However, financial services leader J.P. Morgan expects a strong rally in the risk assets markets such as crypto.
Bitcoin has fallen over 12% in the last 7 days and is well below the $20K mark. Ethereum continued its slide after the merge and has fallen close to 20% in the last 7 days. The entire altcoin market faced a major beat down.
JP Morgan Expects Strong Crypto Rally
JP Morgan believes that the bottom for risk assets and the stock market is very near. Global Head at JP Morgan, Marko Kolanovic, reveals that he is bullish on the market. Kolanovic points to the better-than-expected performance of the corporate earnings to support his sentiment. The low investor positioning will also help the market in the long term.
Marko does believe that the Fed will continue with its hawkish stance. According to him, the Fed will decide on a 75 bps interest rate hike at tomorrow’s FOMC meeting. Moreover, he believes that a 100 bps hike cannot be counted out in the future. However, he believes that “well-anchored long-term inflation expectations” will prevent the market from sliding further.
CNBC’s popular analyst Jim Cramer reveals that inflation is hurting equities and corporate earnings. However, due to the low positioning by most investors, any good news can spur a rally.
Kolanovic believes that the Fed will start cutting interest rates early in 2023 which will backstop the equity market. He reveals that a strong rally can be expected thereafter.
What Will Be The Fed’s Decision?
The Federal Reserve will make its decision on the next interest rate hike tomorrow at the FOMC meeting. While the CME Fed Watch tool is expecting a 75 bps hike, crypto analysts like Michael van de Poppe believe that a consensus seems to be forming around a 100 bps hike.
