JPMorgan’s Warning on Fed Rate Cuts Shakes Up Stock and Crypto Markets

JPMorgan’s latest comments have raised alarm among traders and investors, as the firm downplays the chances of a bull market despite widespread expectations for Federal Reserve rate cuts.

According to JPMorgan’s Mislav Matejka, any potential rate reductions are likely to be reactive measures to slowing growth rather than catalysts for a market rally.

In a recent update, Matejka noted that September, traditionally a tough month for U.S. equities, coupled with heightened political and geopolitical risks, could dampen market optimism. The S&P 500 and MSCI All-Country World Index have reached record highs, partly due to speculation about upcoming Fed actions, but JPMorgan anticipates that rate cuts might not sustain this momentum.

The crypto market, meanwhile, is also adjusting to the news. Despite expectations for rate cuts, Bitcoin and other cryptocurrencies have struggled to gain traction. BitMEX co-founder Arthur Hayes highlighted a 10% drop in Bitcoin’s value since recent rate cut discussions began, suggesting that the anticipated benefits of such cuts are not materializing.

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Additionally, Hayes pointed out that the Reverse Repo Program (RRP), which allows institutions to park funds with the Fed, might be pulling investment away from riskier assets like cryptocurrencies. As a result, both stock and crypto markets are navigating uncertainty as they await further developments.

Alexander Stefanov