macroeconomic conditions.
The consumer spending data highlighted that the Fed's aggressive policy was insufficient to significantly combat inflation.
As a result, the central bank is likely to adopt an extremely hawkish stance. However, financial services behemoth J.P. Morgan anticipates a substantial rebound in risk assets markets such as cryptocurrency.
Bitcoin price has dropped more than 12% in the last seven days and is currently trading well below the $20K mark. Also, the Ethereum price continues to fall after the merge and has fallen about 20% in the last seven days. The entire altcoin market was battered.
JP Morgan Anticipates Strong Crypto Rally
JP Morgan believes that the risk assets and stock market have reached their bottom. Marko Kolanovic, Global Head at JP Morgan, admits that he is positive about the market. Kolanovic grounds his optimism on company performance outperforming expectations. He also believes that the low investor positioning will also benefit the market in the long run.
Marko anticipates that the Fed will continue its hawkish stance. He believes the Fed will raise interest rates by 75 basis points at tomorrow’s FOMC meeting (September 21). Furthermore, he feels that a 100 basis point increase is unavoidable in the future. However, he believes that "well-anchored long-term inflation expectations" would keep the market from falling further.
Jim Cramer, a prominent CNBC analyst, warns that inflation is affecting markets and corporate profitability. However, considering most investors' low positioning, any favorable news can spark a rally.
Kolanovic expects that the Fed will start lowering interest rates in early 2023, which would support the equity market. He reveals that a significant rally is likely to occur.
What Will Be The Fed’s Decision?
The Federal Reserve will decide on the next interest rate hike at its FOMC meeting tomorrow (September 21). While the CME Fed Watch tool predicts a 75 basis point hike, crypto experts like Michael van de Poppe believe a consensus is building around a 100 basis point hike.
Read also: Bitcoin could go below $15,000, According to Analyst
