Chill! Crypto Will Recover Pretty Soon, JP Morgan Exec Predicts
The entire cryptocurrency industry is currently experiencing a severe downturn. Bitcoin’s price has fallen 15% from its weekly high. Ethereum’s price has fallen 23% from its 7-day moving average since the merger.
As cryptocurrency markets tend to reflect the wider financial world, panic in one area can easily spill over into another. By contrast, the global head of JPMorgan predicts that the rise of the cryptocurrency industry will come sooner or later.
Marko Kolanevic, head of global operations at JPMorgan, expressed optimism about the cryptocurrency space.
JPMorgan Global CEO optimistic about cryptocurrency recovery
He highlighted the larger performance of the overall financial sector and said financial markets had bottomed out and were poised for a quick recovery.
Kolanovich expects the Fed to start lowering interest rates in early 2023, boosting stocks. After that, risk assets such as cryptocurrencies could see a sharp rally, he revealed.
However, even if true, this claim may be hard to believe for the average investor. The latest inflation report sparked the recent sell-off in stocks and, most importantly, the cryptocurrency market.
“Solid earnings, low investor positioning and well-anchored long-term inflation expectations should cushion any downside in risk assets”
— Gurgavin (@gurgavin) September 19, 2022
The September 21 FOMC meeting could be decisive if the market falls for a prolonged period. The report said a rate hike of just 75 basis points was expected on the day.
According to an earlier report, the market has already priced in a 75 basis point hike. Kolanevic also suggested that a potential 100 basis point hike should not be underestimated.
How does this affect the cryptocurrency market? Well, if the analysis proves accurate, the market will eventually return to a net positive position. If the assertion is incorrect, crypto winter will persist.
The second decision could have a major impact on the cryptocurrency market. A continuation of the stock market’s downward trend will also drive cryptocurrencies lower as the cryptocurrency market follows the broader financial market.
If quantitative tightening continues, Kolaniewicz’s concept of a soft landing could become a reality. Such an early recovery may be feasible if “long-term inflation expectations are well anchored.”
…but not everyone shares his optimism
However, Bridgewater Associates founder Ray Dalio is not as optimistic as Kolaniewicz.
He expects bond yields to rise to between 4% and 6% in the next few years. If this happens, the increase is due to a significant reduction in private credit.
A decline in private credit would translate into a decline in private sector credit, dragging down the overall U.S. economy.
As the market battles falling prices and gloomy investor sentiment, it’s only a matter of time before JPMorgan’s speculation proves accurate.
As anxiety pervades financial markets, cryptocurrencies must face the burden of the current market downturn.
BTC total market cap at $363 billion on the daily chart | Source: TradingView.com Featured image ABC News, Chart: TradingView.com