JPMorgan Chase CEO Jamie Dimon has indicated that the four 0.25 percent key interest rate rises will change the shape of the US economy, as per Walter Bloomberg’s Twitter account. Previously, the Fed’s warning of a rate hike in March caused the stock & digital asset markets to plummet.
The key rate is one of the most important tools for bolstering a government’s monetary policy and sovereign currency, as it creates more favorable conditions for international investors who drive the economy by buying sovereign debt and citizens who prefer to deposit their money in banks rather than the stock market.
Impact on Crypto market !
High key rates not only encourage investment in national currencies, but they also encourage traders to invest in risk-off assets like commodities and precious metals instead of hazardous assets like bitcoin.
The primary causes of the Bitcoin and crypto market decline, which was mirrored in the stock market also. Both disasters occurred following the Federal Reserve’s approval of a significant rate hike in the month of March.
At the same time, strategists from Jamie Dimon, BlackRock, and JPMorgan have claimed that the market is currently oversold and that a short-term rebound is possible.
JPMorgan’s Stand on crypto
A week before JPMorgan said, bitcoin might increase to $146,000 in the long run as it battles with gold. Some investors may be surprised by JPMorgan’s high price forecast for bitcoin. The bank’s CEO, Jamie Dimon, has previously called bitcoin a “fraud” and compared it to the 17th-century tulip bulb mania.
Dimon, on the other hand, is a firm believer in the blockchain technology that supports digital currencies such as bitcoin. JPMorgan has placed a big bet on blockchain, introducing its own digital currency, JPM Coin, and forming a new blockchain unit.
Higher Interest Rates A Boon for BTC?
Higher interest rates in 2022, according to Bitcoin bull Anthony Pompliano, may have a different influence on BTC’s price than many analysts initially predicted.
In a new interview with CNBC, Pompliano, the co-founder of Morgan Creek Digital, claims that BTC could be linked to an unexpected indication.
“The other thing that I’m watching right now, and I don’t think we have enough data yet, but over the last couple of weeks, I’ve seen a couple of analysts talking about this idea that Bitcoin’s price is actually tracking/correlated to the [U.S.] 10-year Treasury yield.”
The performance of the 10-year Treasury yield is used by traders to evaluate market sentiment and risk appetite.
Investors choose riskier investments with higher returns, thus a growing yield indicates market confidence. A dropping yield, on the other hand, shows market caution as investors seek safety in Treasury bonds.
In an effort to combat inflation, Federal Reserve officials have stated that they expect to reduce asset purchases and boost interest rates next year.
Pompliano points out that if the 10-year Treasury yield and Bitcoin have a positive correlation, such a strategy may potentially be good for Bitcoin.
He further said, “But if Bitcoin’s actually going to trade alongside [the 10-Year Treasury Yield] – again we do need more data – if that is true, in some crazy way, raising interest rates could be bullish for Bitcoin.”
Pompliano does admit that some of his previous predictions have failed to materialize. He forecasted in 2019 that Bitcoin would reach $100,000 by the end of 2021, around 18 months after the most recent halving in May 2020.
“One of the things I’m watching though is that the 18-month timeframe may be off. We may actually be seeing longer bull markets now rather than those 18-month ones we’ve seen before. Time will tell. Hindsight will be 20/20 on that. But I think that’s one thing to watch.”