JPMorgan Doubts September Fed Rate Cut, Clouding Crypto Outlook
JPMorganChase analysts now see a September Fed rate cut as highly unlikely. Persistent inflation and a divided FOMC, even with the addition of dovish member Stephen Miran, mean the Federal Reserve is expected to hold interest rates steady. Chair Jerome Powell’s swing vote remains pivotal amid varied opinions.
For crypto traders, the absence of a Fed rate cut suggests continued high borrowing costs, which often draws capital toward safer assets and away from riskier cryptocurrencies. Market participants should monitor key economic indicators—CPI, PCE, employment figures—and Fed communications for shifts in tone. While easing remains possible later in the year if inflation cools significantly or the labor market weakens, September appears off the table. A neutral-to-bearish stance on digital assets may prevail until clear signs of policy easing emerge.
Bearish
JPMorgan’s assessment that a September Fed rate cut is unlikely signals sustained high interest rates. Historically, rate hikes and prolonged high rates have drawn funds toward safer, yield-bearing assets, reducing speculative inflows into cryptocurrencies. Without the anticipated Fed rate cut, the crypto market may face liquidity constraints and muted bullish momentum. In the short term, traders could see sideways to downward price pressure as investors await clearer easing signals. Over the longer term, the prospect of eventual rate cuts remains, but only once inflation data and labor market indicators soften significantly. Until then, digital assets are likely to underperform compared to risk-off instruments, justifying a bearish outlook.