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The entire crypto industry is currently suffering from a huge downturn: the price of Bitcoin has fallen 15% since its weekly high, and Ethereum is also retreating from The Merge. However, a top analyst at America’s largest bank is convinced: The crypto industry will see a bull market again soon.
JPMorgan bullish on cryptocurrencies
Because the cryptocurrency market tends to reflect the financial world at large, panic in one area can easily spill over into another. However, Marko Kolanevic, head of global operations at JP Morgan, the largest US bank, is bullish on the cryptocurrency sector.
He says that the cryptocurrency industry will rebound sooner rather than later. Highlighting the overall better performance of the financial sector, Kolanevic emphasized the following: The financial markets have taken off and are ready for a quick recovery.
Kolanovic expects the US Federal Reserve to start cutting interest rates in early 2023. That will support the stock market. After that, according to Kolanovic, a big rally can be expected for risky assets such as cryptocurrencies like Bitcoin or Ethereum.
But even if that claim is true, it may be hard for the average investor to believe. The recent inflation report fueled the recent sell-off in stocks and especially in the cryptocurrency market.
JP MORGAN SAYS
“CURRENT EARNINGS, LOW INVESTOR POSITIONS AND LONG-TERM INFLATION EXPECTATIONS SHOULD KEEP ANY DOWN IN RISK ASSETS BUT HERE”
— Gurgavin (@gurgavin) September 19, 2022
If the market continues to decline, today’s September 21st FOMC meeting could be crucial. The expected rate hike is only 75 basis points, according to the reports.
Some analysts believe the market has already priced in the 75 basis point rate hike. Kolanevic also said a potential 100 basis point hike should not be discounted.
How does this affect the cryptocurrency market? Well, if the analysis proves correct, the market will return to a positive net position. If the claim is not true, the crypto winter continues.
The second decision could have a significant impact on the cryptocurrency market. As the crypto market is closely linked to the broader financial market, the continuation of the stock market downturn will also push cryptocurrencies lower.
Kolanevic’s concept of a soft landing for the economy could come to fruition if quantitative tightening continues. This early recovery could be possible if “long-term inflation expectations are well anchored”.
Not everyone is so optimistic
Bridgewater Associates founder Ray Dalio is less optimistic than Kolanevic. He expects bond yields to rise to between 4% and 6% over the next few years. If this is the case, the increase can be attributed to a significant reduction in private credit. This decline in personal credit is affecting the US economy as a whole.
With markets struggling with falling prices and bearish investor sentiment, it’s only a matter of time before JP Morgan’s speculation comes true. And as fear grows in the financial markets, cryptocurrencies must lead the way in the current market downturn.
Text credit: Bitcoinist
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