• Sun. Apr 21st, 2024

JPM: Bitcoin Rally May Postpone Federal Interest Rate Cuts

BySamantha Johnson

Mar 8, 2024
JPM: Bitcoin Rally May Postpone Federal Interest Rate Cuts

The soaring price of bitcoin may affect the Federal Reserve’s plans to cut interest rates, as suggested by JPMorgan. The bank warned that signs of excess in risk assets like bitcoin could result in interest rates remaining higher for longer. JPMorgan stated that premature rate cuts could further inflate asset prices or lead to increased inflation, prompting caution from the Federal Reserve.

JPMorgan’s strategist Marko Kolanovic noted that the record rally in bitcoin, along with all-time highs in stock prices, indicate that there is growing “froth” in risk assets. This may cause the Fed to delay its planned interest rate cuts, which are typically supportive of risk assets. The concern is that another round of inflation could be unleashed if interest rates are cut prematurely.

Currently, the market expects the Fed to cut interest rates at least three times in 2024, with the first cut anticipated in June. The stock market has been rallying on the expectation of lower interest rates and controlled inflation, so any delay in rate cuts could disrupt the market’s optimistic outlook. Kolanovic points out that the Fed may adopt a cautious approach if there are no immediate signs of inflation.

Kolanovic remains bearish on stocks, given the market’s high valuation and lack of risk hedging by investors. He notes that stock volatility is at multi-year lows, which is concerning considering the high prices of stocks and the concentration in large-cap companies. Kolanovic has set a price target of 4,200 for the S&P 500, indicating a potential downside of 18% from current levels.

By Samantha Johnson

As a content writer at newszkz.com, I delve into the realms of storytelling, blending words to paint vivid narratives that captivate and inform our readers. With a keen eye for detail and a passion for research, I craft compelling articles that resonate with our audience. My love for words drives me to explore diverse topics, ensuring that each piece I create not only educates but also entertains. Join me on this journey as we navigate the ever-evolving landscapes of news and knowledge together.

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