According to the Global Head at JP Morgan, Marko Kolanovic, a Crypto market rally is in the offing. He adds that the risk market, overall, is heading for a bullish cycle after prolonged sluggish markets.
The Crypto market is adjusting to the turbulent economic cycle. To steer the economy in the right direction, the Federal Reserve has assumed a hawkish approach in remodeling interest rates upwards. The consequence has been reduced liquidity in the market which has hurt retail Crypto consumers who have to choose between buying Crypto or filling their gas tanks.
However, buyers are rethinking their priorities as the reality hits that the high prices may be here for the long haul. Markets are consequently adjusting, and investors’ activity is rising gradually. However, the Crypto winter is still on.
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An Interest Rate Hike Looms as The Market Stabilizes
Kolanovic predicts that the Jerome Powell team will adjust the interest rates by 0.75 basis points. Further, Michael van de Poppe alleges that there is consensus amongst the committee members on adding a basis point to the benchmark rate.
The JP Morgan analyst believes that the high-interest rate will not adversely impact the Crypto market. A rally will ensue instead when the financial and economic situation stabilizes.
In July, the monetary committee increased the rate by the same margin, and Bitcoin rallied by 9.6% in the next few days. A market correction has since reversed the gain. But Bitcoin has been relatively stable since then, trading at $18,000 to $24,000.
As the market activities commenced yesterday, the market was already looking upwards. Bitcoin and Altcoins are rallying daily. In the last 24 hours, BTC has surged by 2.58% to trade at $19,319.83. The week-on-week losses have narrowed to 13.24%.
Corporate Will Invest Their Huge Margins in The Crypto Market
Institutions are making super-abnormal profits as they take advantage of the high demand and prices of commodities and services. Kolanovic is optimistic that the increased corporate earnings will be invested in the Crypto market.
CNBC’s Jim Cramer adds that positive news may spur a market rally. As corporates announce their financial performance, the market will break into a bull run as investors anticipate a capital inflow. Confidence will be high, and investor sentiments will be bullish.
Projection Shows that The Rally Will Start in 2023
According to Kolanovic, the market will remain sluggish in the current year, although a short-term rally could commence this week. However, the Federal Reserve will reverse the interest rate increases in 2023 after the inflationary gap narrows. Corporates and individuals would have a higher disposable income for investing in Digital Assets.
Meanwhile, it is a buyers’ market as Crypto prices remain low. ETH, for instance, is trading at $1,357 on Coinmarketcap.